EUR/HUF Extends Tuesday's Move Higher

EURHUF (+0.23%) has seen a slight uptick in recent trade and has extended yesterday’s move to reach an intraday high of 370.90. Nevertheless, technical conditions remain bearish with attention still on key support at 367.59 – the June 12 low and bear trigger. HUF performs mixed in the broader EM space overall (PLNHUF: -0.15%; CZKHUF: +0.05%).

• Local bonds trade firmer across the curve, with the short-end seen outperforming. Yields on 3Y bonds last deal at 8.783 – a fresh YTD low. 10Y yields look to test the 7.000 mark, a level that markets failed to break back in June.
• Worth noting that Nagy said in an interview last night that while he does not intend to interfere with the central bank’s inflation-stabilising mandate, he seeks a debate on whether it is worth allowing a higher inflation rate than previously targeted. Consensus sees the NBH continuing with monthly 100bp cuts to the one-day deposit rate until it converges to the 13% base rate in September. However, the policy outlook is less clear beyond this with some government officials previously having expressed impatience with the NBH's restrictive stance.