European emerging market currencies may soon stage a S-T rally vs EUR, shrugging off this morning’s weakness stemming from Greece concerns, as PMI data point to economic resilience, writes Bloomberg strategist Mark Cudmore.
- Hungarian PMI, at 55.1 vs 51.2 prior, will support HUF as expansionary phase continues into its 22nd month despite volatility in data
- EUR/HUF breaks 309.65/75 resistance this morning but may not follow through due to lack of momentum; 6-wk uptrendline at ~308.00 provides key support
- PLN has been best performing currency in world since May 26 and zloty strength will continue despite PMI at 52.4 vs. 53.5 est. as reading remains firmly in expansion territory for eighth month
- Czech PMI, released at 55.5, has been firmly in expansion territory for 2-yrs. and follows strong 1Q GDP data from Friday at 4.2% y/y; EUR/CZK support comes in at 6-wk. low of 27.302 although pair remains stubbornly stable
- Russian PMI was notable exception in region with fall matching record low level of 47.6 but Brent crude rally end of last week likely to still support N-T ruble bounce even if macro picture deteriorating again; 50-DMA, currently ~52.94, provides immediate topside resistance for USD/RUB
- Turkish PMI bounces in to expansion territory, at 50.2 vs 48 est., for first time in 2015 and TRY may continue to outperform EUR as a result even if USD/TRY is set for a run toward 2.7045 resistance after breaking 5-wk downtrendline from record high
- NOTE: Mark Cudmore is a strategist who writes for Bloomberg. The observations he makes are his own.
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