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Divergence in CE3 CBs Should Lead to PLN Outperformance, JP Morgan Say

CEE FX
  • JP Morgan think that divergence of central banks in CE3 should lead to PLN outperformance in terms of RV positions against currencies like HUF. They note that EM FX suffered in general yesterday on the back of the US CPI release, so are looking for better levels to re-engage with short EURPLN - towards 4.36.
  • Meanwhile, JP Morgan have reduced their EURCZK longs a bit, concerned on over positioning in short CZK, while also noting that their strategy took profit in PLNCZK longs. Aside from positioning, however, they say there is little to support the CZK since the dovish CNB seem less concerned about CZK weakness and happy to continue to cut.
  • Given the weak 4Q GDP data released today, a softer inflation print last week and an NBH willing to cut by 100bps, HUF should remain weak, JP Morgan say, and therefore stick with shorts in HUF.

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