EURHUF - what's left to hit? Close short, go long until you can!Seriously I don't understand what the hell can be so attractive in the Goulash currency. Nothing has changed and I think nothing will change in economy policy there after the elections. I talked to some of my friends who work as fx spot traders or rate traders in bank treasuries, asked them what do they see or hear from major customers, what are the idea behind HUF strength. Most of the answers were funny, but what I liked the most was: "this is a re-newed carry trade, on the back of emerging and periferia bond spread compression idea". OMG! What the hell is the carry here? Adjusted with the basis, etc, it is maximum 1,8 % if you look at the front end rates. What's even better is that as I heard and checked myself too, Hungary's USD denominated 2023 maturity bond is trading only 35 basis points below the same maturity HUF denominated issue. (USD at 5 % yield vs HUF bond at 5,35 %). I discussed it with a very good friend of mine, who I respect a lot and who I think is one of the best professional experts, and he called my attention to one more thing: besides this compressed spread, USDHUF trades at same level as e.g. 16 years ago! So tell me now, where is the carry here??? Is 35 bps enough risk premium to hold a 10 year local ccy bond there?
Sorry for being too long and too much fundamental, but this points to one thing again: greed rules everywhere now, investors, global realmoney and hedge fund managers lost their mind. Eveybody underestimates risks eveywhere, markets have become ignorant all around. Everybody is just chasing performance, yields, while they should realise by now, that at current pricing levels nothing is really attractive compared to risks (neither stocks, nor EU periferia or emerging bonds, etc). Actually there is no real alternative cost by now, and that means one thing: cash is king.
And now back to technicals:
Seems EURHUF has built a kind of base between 304-305,5.
Daily: price got blocked slightly below the Kumo at this horizontal key support. Slow Stoch (which is still,very reliable indicator on EURHUF) is about to give a buy signal.
4 Hrs: a trend break is very close, price can easily make a Kijun Sen cross, which will be likely followed by a weak bullish Tenkan/Kijun cross too. DMI also supports a correctiive bullish reversal.
I really doubt HUF could be resistent further to risk off sentiment. And I also have a feeling that yesterdays reluctant price action suggests everybody is loaded with HUF, so mkt positionning is short EURHUF and short USDHUF now.
I already bought some yesterday, and I think I will add to longs now. First target is 310.
