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Commodities - Technical Analysis
Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
In order to achieve diversification in terms of currency, government bonds denominated in euros and dollars in the region — particularly Hungarian and Romanian bonds — offer attractive returns with acceptable — albeit increasing — risks.
Euro or dollar bonds issued by companies in the region (including Turkish issuances more broadly) still offer a yield premium over similar-rated bonds issued by companies in Europe or the US, while the risk profile of the former is similar or better.
Euro-Denominated Corporate Bonds
Yields on corporate bonds issued in euros have fallen steadily over the past three months as risk appetite has improved. This makes it particularly difficult to find corporate bonds that still offer meaningful yields at acceptable risk levels.
Dollar-Denominated Corporate Bonds
Companies in the region typically issue bonds in euros, with a much narrower list available in dollars. For this reason, the list includes two MREL bonds issued in recent years that are linked to OTP, of which the 2027 senior preferred is ranked higher than the longer-maturity 2033 subordinated paper. In both cases, there is the possibility to call the bonds earlier, in which case the resulting yield potential is much more limited.
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