The Hungarian forint returned to its bullish trend on Wednesday and the EUR/HUF pair tried to attack the 250.0 resistance again. The unit was supported by another strong performance of the domestic bond market, while a negative correction on the Polish FX market was not followed.
Looking the intra-day trading: the forint started the session on good footing and positive atmosphere lasted till the trading. Hence EUR/HUF opened at the 251.0 level while the pair was moving steadily south to a forint lower. Surprisingly, the currency completely ignored the European Commission’s suggestions (released around the mid-noon) to come up with a new Convergence Programme and detail plans to reduce its excessive public budget deficit. It is worth noting in this respect that Finance Minister Veres was quick to reassure the market that Hungary would stick to its current (unrealistic) target for the euro adoption, which is January 2010.
Today, the forint will probably watch the domestic market again, which has enjoyed renewed interest from foreign investors. However, the ECB meeting and a following press conference will be in spotlight too and any hawkish comment from Mr. Trichet might make forint’s life harder. At the same time EUR/HUF might keep fighting with the 250.0 barrier.
(CSOB - Investment research)