The Hungarian forint extended its losses
on Wednesday as it followed the Polish zloty
lower. Sell-off in core and domestic equity
market was not supportive too. As concerns
there was little new. Just Gazprom has
announced that it is cutting gas supply to
Hungary (and other countries) due to very
cold weather in Russia. Since this move
looks to only a temporary measure this piece
of news could not be a market mover
yesterday.
Looking at Wednesday’s intra-day trading:
the forint opened the session on a bad
footing since the EUR/HUF immediately
plummeted to the 252 zone. The EUR/HUF
pair then moved further north in step with
EUR/PLN reaching its two-weeks high at
252.35 before the noon. EUR/HUF than
remained in a sideways mode till the end of
the session.
Today, the market will focus on the domestic
bond market, because there is a 5Y and 10Y
government bond auction. The market
sentiment has worsened during last two
days, but it does not necessary mean that
there will be low demand in the auction. We
believe that the current low HUF and bond
levels should attract sufficient demand.
Hence, an outcome of the auction should not
be a market mover. On the other hand, a
development on the Polish FX market
should be more instructive.
(CSOB - Investment research)