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RBC on NBH and HUF

HUNGARY
  • RBS thinks the NBH needs to deliver a minimum hike of 100bps (RBC base case) and keep the door open for more hikes, given the NBH’s message that a “decisive continuation of the tightening cycle” is warranted after the bank had hiked the base rate by 200bps earlier this month (BBG cons. is +100bps, w/estimates from +50 to +125).
  • RBC thinks that anything less than this amount would send the wrong message about the extent of the NBH’s hawkishness, as the NBH is not out of the woods yet and the EU funds situation remains outstanding.
  • Technically, EUR/HUF closed below the trendline off the lows on April 25/June 29 last week, and this opens up 393.89 and 391.18 as the next support levels to watch.

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