EUR/USD reached a new cycle high around 1.25. Dollar weakness persists despite the rising interest rate differential in favour of USD. Trump’s protectionist rhetoric weighted on the greenback.
EUR/GBP stays in a sideways range, roughly between 0.8700 and 0.9050. A break of the downside didn’t occur despite hawkish BoE-rhetoric as the difficult Brexit-process remains a drag on sterling.
USD/JPY is the exponent of dollar weakness. The pair tests key support around 106.50. Investors seem to challenge Japanese officials as they say that current levels of the yen don’t warrant FX interventions.
EUR/CZK: the CNB hiked its policy rate from 0.5% to 0.75%. We expect two additional tightening moves during the year and a strengthening of the koruna towards EUR/CZK 25. Governor Rusnok sounded slightly dovish though after the policy meeting.
The Polish zloty lost some ground this month because of the uptick in market volatility and as the NBP downplayed normalisation expectations. Governor Glapinski delayed the expected timing of a first hike from the end of this year to next year.
EUR/HUF: The forint trades stable between 305 and 315 already for a remarkable amount of time. The MNB continues pursuing an extremely easy policy despite strong underlying growth and inflation momentum.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.