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Goldman Sachs Recommend Short CZK/HUF Trade

CEE FX
FX returns across the CEE have diverged this month with PLN and HUF among the best performing EM currencies MTD whereas CZK has underperformed, Goldman Sachs say. They think this largely reflects the fact that the region’s central banks have been shooting for different targets.
  • Their trade recommendation to be short CZK/HUF has already returned around 1.7% since its inception and they are now tightening the stop to 15.85 to protect potential gains.
  • Given that the CNB’s FX policy has been the main driver of the CZK overvaluation signal over the last few years, Goldman think that EUR/CZK can continue to grind higher as this support fades and the CNB prepares for rate normalisation.
  • They roll their EUR/CZK forecast to 24.60, 24.80, 25.00 in 3-, 6- and 12-months (from 24.25, 24.50, 24.75 previously).

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