/HUF: Further Gains For PLN/HUF As EU Funds Talks Remain Under Scrutiny

PLN/HUF continued to creep higher today, testing resistance from Nov 17 high of HUF88.36, with both countries' relative chances to break the deadlock in funding talks with the EU still under scrutiny. Polish officials continued to telegraph readiness to engage constructively with Brussels, while DW cited sources noting that the ongoing negotiations are genuine. In the same piece, DW reports that the European Commission is preparing to approve recovery funds for Hungary next week, but may advise member states to freeze EUR7.5bn in regular cohesion funds for Hungary.

• The rate briefly pierced the aforementioned resistance level and topped out at HUF88.38 before easing off. It last trades at HUF87.59, up 37 pips on the session. A clean break above HUF88.36/88.38 would bring Oct 13 cyclical high of HUF89.65 into play. Conversely, a dip through Nov 10/Oct 21 lows of HUF84.96/84.91 is needed to give bears some reprieve.
• Poland's government bonds yields keep retreating and last sit 16.0-17.2bp lower across the curve. But contrast, Hungary's yields are 16.5-19.4bp higher at typing. Poland/Hungary 10-year yield spread has widened to more than 150bp for the first time this week.