EURHUF Extends Higher Toward 389.26 Key Resistance

The rally in EURHUF has extended further, with the cross seen breaking through the 386.00 handle as we approached the NY crossover. The day’s gains stand at 0.73% and puts HUF at the bottom of the EM pile. 389.26 – the July 07 high – is the key resistance level to watch. Notably, PLNHUF and CZKHUF trade 1.00% and 1.20% higher, respectively, as the forint’s peers perform well amid the backdrop of an improving US economy.

• Confirmation that Hungary’s ruling party would boycott a meeting discussing Sweden’s NATO accession bid edged EURHUF higher and through the 386.00 handle, which had been providing moderate intraday resistance. While the decision was in-line with expectations after Prime Minister Orban’s lawmakers previously said they would reject ratification during the summer recess, firm confirmation is further evidence of the growing diplomatic tensions between Hungary and the rest of the EU.
• HGBs have traded marginally softer with yields 1-7bps higher across the curve which is steeper on the day. Yields on 15Ys have made the biggest move. They last deal 6.1bps higher at 7.227 – the highest level since early June. The Budapest Stock Index sits 0.25% higher though marginally lags its CEE peers.