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EURHUF Eases Off Intraday High; Sell-Side Undecided Over Trigger of HUF Weakness


EURHUF has eased off 5-month highs of 390.82 printed earlier today, though still trades 0.6% in the green at the time of typing. Broader EUR weakness has been weighing on EM FX today, with Hungary’s CEE peers all experiencing losses against the single currency. Nevertheless, only the South African Rand performs worse than the Forint in the basket of major EM currencies as ZAR trims gains from last month's rally. Going forward, HUF performance is likely going to continue to be a function of the global picture with few notable changes in domestic fundamentals.

  • Broadly, sell-side desks remain undecided over the trigger of this week's HUF weakness so far, with ING flagging the local weakness as a spillover effect of EURUSD, meaning they cannot expect a big HUF reversal absent of a significant recovery in the EUR. Meanwhile, JPM see little as having changed fundamentally outside of evidence of CTA selling the currency.
  • This morning, Hungary's seasonally-adjusted PMI rose to 45.7 in July (Est: 46.0) from 44.6 in June. While the index remains under the 50-point expansionary threshold, it seems to be following the global trend.
  • HGBs trade softer today, broadly in-line with the pullback in global core FI. The yield curve is slightly steeper and 9-11bps higher. 10Y bond yields are at their highest level since early June.

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