Forint Little Changed as Public Holiday, Proximity to Fed Limits Moves

The forint is marginally outperforming its regional peers, though EURHUF ranges are narrow today and liquidity unsurprisingly thin as Hungary observes a public holiday. Relatively muted price action across G10 FX is also likely to limit moves ahead of the Fed rate decision later today – the key risk event of the week.

• While the FOMC are likely to remain on hold for its second consecutive meeting, any potential moderation in hawkish language will be closely watched for its impacts on the HUF due to Hungary’s still-favourable interest rate differential.
• EURHUF ended a 6-day losing streak on the back of the higher-than-expected 75bp rate cut in October. The cross has not yet returned to pre-Oct NBH levels as market participants remain concerned that the generous HUF carry will be further eroded through year-end, with EU fund matters still unresolved also. The next NBH decision is on Nov 21.
• Domestically, trade balance (Prior: EUR708m) and manufacturing PMI figures (Est: 47.5) are on the docket tomorrow morning.