EM Rundown A Trifecta of Big EM Central Bank Decisions

While there are a few top-tier economic events in the G10 this week (RBA minutes and CPI tonight, the RBNZ’s monetary policy meeting on Thursday, UK retail sales on Thursday, and Eurozone PMI figures on Friday), FX traders may want to turn their attention to emerging market currencies for a trifecta of central bank decisions this week.

USDHUF: Keep the (Mini) Cuts Coming!

Hungary’s Maygar Nemzeti Bank will kick off the action tomorrow morning, and it looks likely to continue its cycle of (mini) rate cuts. After a pause through the second half of last year and Q1 of this year, the central bank has lopped off 15bps from its benchmark interest rate at each of its last four meetings. Some analysts expect a 10bps cut this week, but in the grand scheme of things, forward guidance on the path and eventual target of interest rates is far more important than the difference between a 10bps and 15bps cut. Readers trading the Hungarian forint should keep an eye on 290 resistance in USDHUF and possible 100-day MA support at 306 in EURHUF.

USDTRY: No Change Likely, All Eyes on CBRT’s Inflation Assessment

The Central Bank of the Republic of Turkey (CBRT) will conclude its monetary policy meeting on Thursday, and analysts are unanimous in expecting no change to any of Turkey’s three main interest rates. Assuming there’s no big surprise, the most market-moving aspect of the meeting will be the central bank’s assessment of inflation, which recently dipped to a 2-year low of “just” 7.2% annually. If the CBRT is optimistic on the prospects for the Turkish economy, USDTRY could dip back toward previous support at 2.64, while a more pessimistic outlook could take USDTRY through its bearish channel and up toward 2.75 next (today’s big breakout in the RSI indicator hints at this possibility).

Source: City Index

USDZAR: Will the SARB Start its Hiking Cycle on Thursday?

Far more than its 30° E longitude rival to the North, South Africa’s central bank has a very tough decision on Thursday. Analysts are roughly split on whether the central bank will kick off its hiking cycle on Thursday, with most of the rest anticipating that the SARB will hold off until September. In our view, there are three scenarios that could play out at the meeting. From our perspective, the most likely outcome is that the SARB will start hiking rates, which would presumably be bullish for the rand. Alternatively, if the SARB holds off, but heavily hints at a rate hike in September, the rand could hold steady with USDZAR continuing to consolidate below 12.60 resistance. Finally, if the central bank is dovish and fails to foreshadow a September hike, USDZAR could rally though 12.60 resistance to a new 13.5-year high.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.