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CEE FX Under Pressure Ahead Of EU Veto Deadline

HUNGARY
  • Tentative bull flattening continues concentrated in 20Y yields (-2.2bp)
  • while the front end drifts higher towards 1.02. Expect volatility to pick up around today's EU veto deadline
  • with selling pressure likely to push yields back to Friday's highs if Hungary & Poland maintain their veto.
  • USD/HUF continues to drift higher as markets price in a higher political risk premium, supported by USD upside.
  • Focus today is on CPI, expected to print between -2.8% to -2.9% below the 3% target
  • vindicating market expectations that the spike in inflation was mostly transitory.
  • Main price action driver will remain today's budget Veto decision with it looking like The EU will push to sidestep both holdouts.
  • May see spot return to 300 resistance and push back into the 300-305 lateral range.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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