EUR/HUF Pierces Key Resistance at 378.79, Signaling Scope for Move Higher

EURHUF has pierced key resistance at 378.79 - the May 19 high - in recent trade, taking the day's gains to ~1%. A continued move higher would signal scope for a further extension higher and reverse the recent bearish trend. There are no domestic news stories driving price action today, though some sell-side desks have noted the deteriorating PMI print, broader slowdown in European growth and HUF positioning as factors driving the Forint lower this week.

• Hungary’s local yield curve sits steeper and 4-7bps higher today, mirroring the souring sentiment seen in HUF. Yields on 10Y bonds have recovered from 1Y lows though remain below the 7% level. The Budapest Stock Index trades 0.30% in the red amid a generally mixed showing from European equities.
• Looking ahead to the remainder of the week we have retail sales data (Est:-110.0% y/y), industrial production data (Est: -6.5% y/y) and CPI data (Est: +20.1% y/y; +0.3% m/m). Economic activity has slowed significantly in all sectors in recent months while the disinflation process has picked up pace. A continuation of these trends will bolster the NBH’s case for a continuation of gradual easing at their next policy meeting (Jul 25).