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Weak HUF and Positive Inflation Surprise Increase Odds For A New Hike in 1W Depo Rate

HUNGARY
  • Yesterday, economic data showed that CPI inflation accelerated to 9.5% in April (vs. 8.9% exp.), its highest level since June 2001, up from 8.5% the previous month.
  • HUF remains weak following the inflation print, with EURHUF trading around the 380 level.
    • ST support to watch on the downside stands at 376.30 (50DMA).
    • On the topside, resistance to watch stands at 384.70.
  • We have seen recently that a strong ‘positive’ surprise in inflation combined with a ‘weak’ HUF could push the NBH to act via its 1W depo rate facility in the short term.
  • A few analysts are currently expecting the 1W depo rate to remain steady at 6.45%; however, odds for a 15bp to 30bps hike on Thursday are non-negligible.
  • The NBH will publish the central bank’s minutes of the April meeting (2pm CET).

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