/HUF: Pair Spikes Higher Amid Race For EU Funds

A FAZ source report noting that the EU Commission could freeze EUR7.5bn in funds for Hungary lends support to PLN/HUF, sending the rate around 1.3% higher to a fresh intraday peak of HUF87.42. The pair has now eased off highs and trades +68 pips at HUF86.95. Topside focus falls on Nov 17 high of HUF88.36, with bears eyeing Nov 10/Oct 21 lows of HUF84.96/94.91.

• Poland and Hungary are the two member states struggling to persuade Brussels to unlock their allocations of EU funding over rule-of-law concerns. Budapest's reform offers have been met with sceptical response of EU lawmakers looking to pressure the Commission not to compromise on its key demands. All major groups in the European Parliament have signed off on a resolution (to be voted Thursday) calling Hungary's promises "not sufficient."
• By contrast, Polish officials have been softening their rhetoric. According to an Onet source report, PM Morawiecki has convinced ruling party leader Kaczynski to greenlight restarting talks with Brussels despite the hardline stance of coalition partner led by eurosceptic Justice Minister Ziobro.
• The FAZ report inspired a notable upswing in Hungarian government bond yields, which trade 16.1-34.6bp higher at typing. Polish yields are also higher, albeit by smaller margins of 2.1-7.0bp. Hungary/Poland 10-year yield spread has moved away from cyclical narrows this week, with the FAZ piece facilitating renewed divergence.