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HUF: More Hawkish ECB Rate Pricing, EUR Bounce Aids Forint Recovery

HUF
CEEMEAEM BulletBulletEmerging Market NewsHungary

More hawkish ECB rate pricing on the back of the Hesse CPI data out of Germany and the associated bounce in the euro has helped the forint recover from Friday’s lows. The ECB-dated OIS strip implies around 100bps of cuts priced through ’25, compared to 115-120bps seen just before the Christmas break.

  • For EURHUF, the cross sits around 0.5% lower compared to last week’s high, where it came within close proximity to December’s two-year high of 416.42. Above here, we flag 418.50, a retracement level of the Oct ‘22 - Jun ‘23 bear cycle, as next resistance.
  • Local focus turns to PPI, budget balance, industrial production and retail sales figures all due later in the week. ING note that after the strong October figures, they expect some corrections and see declines in both retail sales and industrial production on a monthly basis. However, they still believe that the big picture will show just enough improvement for Hungary to emerge from a technical recession in the fourth quarter.
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More hawkish ECB rate pricing on the back of the Hesse CPI data out of Germany and the associated bounce in the euro has helped the forint recover from Friday’s lows. The ECB-dated OIS strip implies around 100bps of cuts priced through ’25, compared to 115-120bps seen just before the Christmas break.

  • For EURHUF, the cross sits around 0.5% lower compared to last week’s high, where it came within close proximity to December’s two-year high of 416.42. Above here, we flag 418.50, a retracement level of the Oct ‘22 - Jun ‘23 bear cycle, as next resistance.
  • Local focus turns to PPI, budget balance, industrial production and retail sales figures all due later in the week. ING note that after the strong October figures, they expect some corrections and see declines in both retail sales and industrial production on a monthly basis. However, they still believe that the big picture will show just enough improvement for Hungary to emerge from a technical recession in the fourth quarter.