/HUF: Pair Slips Despite Continued Widening In Hungary/Poland Yield Spread, EU Funds In Focus

PLN/HUF has traded with a bearish bias, with eyes on Poland's and Hungary's talks with the EU on unblocking their access to suspended funds. The Forint has outperformed the Zloty even as Warsaw appears to be closer to breaking the deadlock in negotiations. The weekend brought a confirmation that the European Commission approved the operational arrangements on Poland's National Recovery Plan, while source reports pointed to the determination in Poland's ruling party to make progress on the matter. Meanwhile, EU member states are expected to discuss funding for Hungary this week, with Budapest losing some of its leverage after the Council designed a way to circumvent its veto against EUR18bn in aid for Ukraine.

• PLN/HUF last trades at HUF88.62, down 67 pips on the day, despite lodging new two-month highs earlier in the day. Further losses past Nov 29 low of HUF86.66 are needed to bring Nov 23 low of HUF85.82 into play. On the flip side, a key near-term bullish target is provided by Oct 13 all-time high of HUF89.65.
• Hungary/Poland 10-year yield spread has extended its recent widening, albeit at a slower pace. The differential now sits at its widest levels in around two months.