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JGB TECHS

(Z1) Bearish Trend Condition

AUSSIE 10-YEAR TECHS

(Z1) Bearish Price Sequence

AUSSIE 3-YEAR TECHS

(Z1) Off Recent Highs

US 10YR FUTURE TECHS

(Z1)‌‌ Support Appears Exposed

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  • In recent weeks, the escalating tensions between Hungary / Poland and the EU (series of legal disputes) combined with the rise in uncertainty over the Delta variant have been weighing on CEE currencies, especially HUF and PLN.
  • HUF is the worst performer this month among the CEEMEA market, down 2.4% against the USD, followed by PLN (-1.7%).
  • In addition, forward rates have been falling in {PD} Poland amid dovish NBP as the majority of the board (including Governor Glapinski) still aim to keep interest rates low as the uncertainty over the economic recovery remains elevated.
  • Hence, momentum on equities have been fading in the past few weeks; periods of currency depreciation in the EM markets are usually associated with equity weakness.
  • For instance, the chart below shows the strong co-movement between USDPLN (inverted) and WIG20 index in the past cycle.

Source: Bloomberg/MNI