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HUF: EURHUF Rises to Highest in Over a Week Following Third Consecutive CPI Beat

HUF
CEEMEAEM BulletBulletEmerging Market NewsHungary

EURHUF (+0.35%) has risen to its highest level in over a week after data this morning showed a further acceleration in inflation to +5.6% Y/Y in Feb from +5.5% in Jan, against expectations of a slight slowdown to +5.3%. That marked the third consecutive upside surprise to the headline rate. Surging food and services prices more than offset a sharp fall in fuel prices, prompting the government to implement profit caps on 30 food products.

  • HUF FRAs pushed higher in response to the data, indicating an even narrower scope for rate cuts through 2025. While this initially supported the forint, the local currency has since reversed lower against the euro, reaching its lowest in over a week as the implications of another upside surprise to inflation are digested.
  • In particular, the data may further undermine consumer confidence given much of the significant price increases are concentrated within everyday purchases. This leads ING to “fear a recessionary impact of inflation rather than a price-wage spiral”.
  • Ongoing weakness across major equity benchmarks will be providing a further headwind to the forint, while Bloomberg reported earlier comments from Western security officials claiming that Russian President Putin's 'maximalist' position means he knows Ukraine and Europe will not accept his conditions and that he is content to continue the war in its current complexion.
  • For EURHUF, the cross is trading above initial resistance at 401.45, the 20-day EMA. A clear break of this average would expose key resistance at 404.45, the 50-day EMA. USDHUF remains 0.5% lower on the session amid broad-based greenback weakness.
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EURHUF (+0.35%) has risen to its highest level in over a week after data this morning showed a further acceleration in inflation to +5.6% Y/Y in Feb from +5.5% in Jan, against expectations of a slight slowdown to +5.3%. That marked the third consecutive upside surprise to the headline rate. Surging food and services prices more than offset a sharp fall in fuel prices, prompting the government to implement profit caps on 30 food products.

  • HUF FRAs pushed higher in response to the data, indicating an even narrower scope for rate cuts through 2025. While this initially supported the forint, the local currency has since reversed lower against the euro, reaching its lowest in over a week as the implications of another upside surprise to inflation are digested.
  • In particular, the data may further undermine consumer confidence given much of the significant price increases are concentrated within everyday purchases. This leads ING to “fear a recessionary impact of inflation rather than a price-wage spiral”.
  • Ongoing weakness across major equity benchmarks will be providing a further headwind to the forint, while Bloomberg reported earlier comments from Western security officials claiming that Russian President Putin's 'maximalist' position means he knows Ukraine and Europe will not accept his conditions and that he is content to continue the war in its current complexion.
  • For EURHUF, the cross is trading above initial resistance at 401.45, the 20-day EMA. A clear break of this average would expose key resistance at 404.45, the 50-day EMA. USDHUF remains 0.5% lower on the session amid broad-based greenback weakness.