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HUF Still Testing New Highs Following NBH Decision Last Week

HUNGARY
  • Momentum on HUF has been bullish following NBH decision to raise the benchmark rate by 30bps to 1.20% on Tuesday (vs. 20bps expected) combined with broad USD weakness.
  • HUF is up 2.50% in the past 10 days, nearly recovering from all its July depreciation.
  • USDHUF ticks lower this morning and is currently trading slightly above its 200DMA at 298.30; next level to watch below that stands at 297.70 (100DMA that the pair rejected yesterday), followed by 296 (50DMA). On the topside, first resistance to watch above 300 stands at 305.
  • Hungary 10Y yield has been retracing lower in the past few days after finding a local high at 2.88% last Thursday and is currently trading slightly below its 100DMA support at 2.81%; next level to watch on the downside stands at 2.70%. On the topside, first resistance to watch stands at 2.84% (50DMA), followed by 2.88%.
  • On Monday, NBH deputy governor Virag said that the NBH is seeking price stability as soon as possible and will give a 'decisive response' to any CPI risks.
  • This morning, economic data showed that retail sales came in higher than expected at 5.8% YoY in June (vs. 4% YoY).
  • Next important data to watch will be July CPI print coming out on August 10.

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