KBC Market Research Desk
KBC Bank
Currencies
Both dollar weakness(low real yields) and euro strength (vaccinations) brought EUR/USD back within the 1.22 area. Lacking clear catalysts (eg.divergence in monetary policy, economic data), the couple is now stabilizing.
EUR/GBP is trapped within a tight sideways trading channel. Hawkish comments from BoE policymakers Vlieghe, Ramsden or Cunliffe are not yet triggering tightening bets in a sustained way. EUR/GBP 0.86 is turning out to be the couple’s favourite playground for the time being.
USD/JPY has become an alternating balance of weakness between the dollar and the yen in recent weeks: choppy trading in a narrow upward trend channel close to 110.
CE currencies rallied late. In EUR/CZK, the krone gained on incoming interest rate support as announced by the central bank. The CNB is deviating from the common central bank view that inflation will be completely temporary. A first-rate hike is possible in August.EUR/CZK is attacking 25.45 support.
Continued strong inflation prints triggered a verbal stance by the Hungarian central bank. Its deputy governor Virag said the first-rate hike in June, after a new MNB inflation report, would be necessary to ensure price stability.EUR/HUF 343 is a strong support zone though.
Inflation in Poland also ticked higher. While some members of the NBP governing council argue for a(symbolic) rate hike, the majority is still against tightening. Nevertheless, the market thinks the central bank will have to change tack eventually, keeping the zloty near recent highs. EUR/PLN is near 4.45 support.
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.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.