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HUF: EURHUF Settles Below 400 Following Tuesday’s Sell-Off

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EURHUF (+0.1%) is trading just below the 400.00 handle following yesterday's 0.6% sell-off. There was no clear driver behind the move, though a fall in crude prices from multi-week highs may have provided the forint a tailwind despite the broader risk-off tone across markets following a lack of new stimulus measures out of China. Initial firm support lies at 397.75, the 20-day EMA.

  • HUF FRAs indicate that money markets are pricing in a less-aggressive easing cycle to year-end, which is likely attributable to the unfavourable HUF developments over the past ~2 weeks. While the NBH tends not to specifically mention HUF weakness in its policy statements, their attentiveness to this matter is implicit in mention of “volatility in investor sentiment”.
  • Supporting the idea of a more gradual easing cycle, Deputy Governor Virag told an investor call yesterday that the NBH’s room to continue cutting interest rates at its upcoming October meeting has narrowed because of geopolitical risks, according to Bloomberg. He cited next month’s elections in the US as well as escalating tensions in the Middle East. The NBH meet next on October 22.
  • CPI data for August is on the docket tomorrow, where policymakers will be hoping that market expectations of a further decline in the headline figure (from +3.4% Y/Y to +3.1%) will be realised, albeit much of the decline is expected on the back of falling fuel prices. Indeed, core is seen edging higher - UniCredit see it rising to +4.8% Y/Y, JPM at +5.0% and ING at +4.7%.
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EURHUF (+0.1%) is trading just below the 400.00 handle following yesterday's 0.6% sell-off. There was no clear driver behind the move, though a fall in crude prices from multi-week highs may have provided the forint a tailwind despite the broader risk-off tone across markets following a lack of new stimulus measures out of China. Initial firm support lies at 397.75, the 20-day EMA.

  • HUF FRAs indicate that money markets are pricing in a less-aggressive easing cycle to year-end, which is likely attributable to the unfavourable HUF developments over the past ~2 weeks. While the NBH tends not to specifically mention HUF weakness in its policy statements, their attentiveness to this matter is implicit in mention of “volatility in investor sentiment”.
  • Supporting the idea of a more gradual easing cycle, Deputy Governor Virag told an investor call yesterday that the NBH’s room to continue cutting interest rates at its upcoming October meeting has narrowed because of geopolitical risks, according to Bloomberg. He cited next month’s elections in the US as well as escalating tensions in the Middle East. The NBH meet next on October 22.
  • CPI data for August is on the docket tomorrow, where policymakers will be hoping that market expectations of a further decline in the headline figure (from +3.4% Y/Y to +3.1%) will be realised, albeit much of the decline is expected on the back of falling fuel prices. Indeed, core is seen edging higher - UniCredit see it rising to +4.8% Y/Y, JPM at +5.0% and ING at +4.7%.