The price action reflect a modest profit-taking, which was seen in some other emerging markets. Looking at the intra-day trading: after the opening at the 250.10 level, the pair was gradually moving north. The pair closed the session at 251.10. There were no domestic moving factors, which could declare the price action (e.g. the successful auction of Hungary 10Y eurobond issue – for more see the fixed-income section). The market will definitely monitor a report coming from the European Commission, which should give Hungary a new deadline for upgrading its Convergence Program (September 1st), At the same time, the Commission will expect that the government will finally deliver some proposals for real fiscal tightening (which is unlikely at least until the May parliamentary election). However, it is question whether the report from Commission might influence the trading, since this news should be mostly price in. Much more important for the forint could a recent bullish turn in the US bond market, which might hurt high-yielding currencies. That is why we see downside risk for the forint today.
(CSOB - Investment research)