CEE FX
Divergent performance of HUF and PLN post-Fed brings PLNHUF’s gains to around 2% over the past two sessions, tipping the 14-day RSI back into overbought territory in the process, with a surge in natural gas prices exacerbating losses for the forint.
- A moderate hawkish adjustment in Hungarian rate pricing following the NBH was further boosted by the Fed (as evidenced by 9x12 FRAs), though this has done little to support the HUF.
- Soaring European natgas futures (up over 5%) is likely working against the HUF here after the leaders of Russia and Ukraine both ruled out the renewal of a key gas transit deal for Europe. “There will be no such contract, it’s clear now,” Putin said. “There is a question of what to do with it now - but that’s not our problem”
- The currency’s high beta to global risk sentiment also continues to account for underperformance across EMEA, with EURHUF at a new cycle high and USDHUF showing above 400.00 for the first time since late 2022. For the former, we flag 418.50, the 76.4% retracement of the Oct ‘22 - Jun ‘23 bear cycle, as the next resistance level of note.
- In contrast, EURPLN is 0.4% lower on the session and looking to test the year-to-date low and key support at 4.2471. A break of this level would place the cross at its lowest since 2020, opening the 4.20 handle next.
Figure 1: EUR/HUF vs. Netherlands 1-Month NatGas Futures (Source: MNI/BBG)
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