Despite some early gains the Hungarian forint closed only little changed after a quite session yesterday

Despite some early gains the Hungarian forint closed only little changed after a quite session yesterday. There were no either domestic or external market movers, but the truth is that the forint decoupled partly from a regional trend as other CE currencies firmed a touch yesterday. The forint’s underperformance could be related to a market pre-positioning ahead of Sunday’s second round of the parliamentary elections. The EUR/HUF pair trades more than one percent below its 28-month high (269.50), which was hit just before the first round of the elections.

We do not expect the forint is going plummet to fresh lows during the last session ahead of the second round. Simply because the election outcome seems to be more predictable than fourteen days ago (the ruling coalition of the Socialist party and Free Democrats is going to win). Hence, we expect soft trading activity today, while EUR/HUF should stay below the 268.0 resistance and definitely below the mentioned 269.50 level.

(CSOB - Investment research)