No story, no price action, no reaction. Double Top?
EURHUF has become really interesting recently. Despite NBH announced to stop easing cycle in terms of base rate cuts (1,35 % right now), they kept and implemented other tools to boost indirect QE further. They closed 2 weeks depo facility, increased liquidity ratio requirements for commercial banks, and all together pusing cash liquidity out of NBH balance sheet they force banks to buy more HUF denominated government bonds into their banking books. What's more, they even provide IRS offers way below regular mkt rates on tenders, which banks can pay (this way hedging their fixed rate exposure) if they undertake the obligation of holding same notional amount of govt bonds as the notional amount of their interest rate swap paid against the Central Bank. The funny thing is that they can have any maturity mismatch, like paying 10y IRS vs buying and roling 3M T-Bills.
All this Goulasch QE caused a rdical move in FX swaps too, first time in history USDHUF long has a positive carry quite long out on the forward curve! This means the positive carry of HUF vas USD or EUR not just disappeared, but is kind of negative now.
And here comes the question: If there is no carry at all, what the hell is the reason behind such a low volatility in HUF? The Forint was extremely stable during the last few weeks of global risk off turmoil, it was hardly reacting to anything unlike for example some other G10 ccys (like CAD or NOK) did.... ok, Hungary is not an Oil producer :-D... but compared to any other EM ccys the relative performance of HUF was remarkable too! The other question is if NBH has any special and silent target? Don't forget, this Central Bank and its President's concept is quite unorthodox in terms of monetary policy.
Reasons may be: still extremely high level of C/A surplus, expected rating upgrade of Hungary later this year (although credit already trades a lot better than a BB S&P, Ba1 moody's rating), very high level of Central Bank reserves, maybe commercial banks already frontloaded bond purchases in last few months.
But most importantly -> there is no special story right now regarding Hungary! Probably not really in focus.
Technicals:
Weekly:
- Ichimoku picture is neutral. price reached important resistance area ard 315-317.
- Heikin Ashi shows loss of bullish momentum this week. No higher high, chance for an inside body, with haDelta/SMA3 cross down. If risk sentiment globally improves a bit, we may see some slip back to lower supports from here
- Strategic key reversal point is coming higher: long term bullish supports are now ard 305-306 / 300-302
Daily:
- Ichimok is still bullish, Kijun Sen is still a bit too low for a reversal signal.
- Heikin Ashi however shows some undecision, as previous top could not be reached either. haDelta/SMA3 zig-zag at zero line. Is it building a double top ard the multiple resistance of 317?
- Lower supports are at 312,50 and 311. Breaking below 310-311 would validate a possible double top on daily with measured tgt to 300-302.
All this Goulasch QE caused a rdical move in FX swaps too, first time in history USDHUF long has a positive carry quite long out on the forward curve! This means the positive carry of HUF vas USD or EUR not just disappeared, but is kind of negative now.
And here comes the question: If there is no carry at all, what the hell is the reason behind such a low volatility in HUF? The Forint was extremely stable during the last few weeks of global risk off turmoil, it was hardly reacting to anything unlike for example some other G10 ccys (like CAD or NOK) did.... ok, Hungary is not an Oil producer :-D... but compared to any other EM ccys the relative performance of HUF was remarkable too! The other question is if NBH has any special and silent target? Don't forget, this Central Bank and its President's concept is quite unorthodox in terms of monetary policy.
Reasons may be: still extremely high level of C/A surplus, expected rating upgrade of Hungary later this year (although credit already trades a lot better than a BB S&P, Ba1 moody's rating), very high level of Central Bank reserves, maybe commercial banks already frontloaded bond purchases in last few months.
But most importantly -> there is no special story right now regarding Hungary! Probably not really in focus.
Technicals:
Weekly:
- Ichimoku picture is neutral. price reached important resistance area ard 315-317.
- Heikin Ashi shows loss of bullish momentum this week. No higher high, chance for an inside body, with haDelta/SMA3 cross down. If risk sentiment globally improves a bit, we may see some slip back to lower supports from here
- Strategic key reversal point is coming higher: long term bullish supports are now ard 305-306 / 300-302
Daily:
- Ichimok is still bullish, Kijun Sen is still a bit too low for a reversal signal.
- Heikin Ashi however shows some undecision, as previous top could not be reached either. haDelta/SMA3 zig-zag at zero line. Is it building a double top ard the multiple resistance of 317?
- Lower supports are at 312,50 and 311. Breaking below 310-311 would validate a possible double top on daily with measured tgt to 300-302.
