Market holidays in several key core markets made yesterday’s session very quite in the Hungarian Forex market. Hence the Hungarian forint moved sideways within the 252 zone the whole session ignoring several interesting domestic news.
First, like some countries in Central Europe, Hungary is negatively influenced by Russian gas giant Gazprom’s decision to cut piped supplies to Ukraine. The Hungarian oil gas group MOL informed that natural gas imports from Russia via Ukraine are down by around third. Note that Hungary heavily depends on Russian gas imports as 56% of country’s consumption come via Ukraine. So far MOL advised its major costumers to use oil instead of gas (if possible), tougher restrictions will depend on weather (colder winter makes the situation worse). Secondly, the Hungarian PMI index showed another strong improvement, since it jumped from 54.7 in November to 58.0 in December, which is all-time high in this month. The detail structure of the December PMI, however, suggests some cautious since the biggest gain was seen in import’s sub-index (+8 pp).
And last not least, Finance Minister János Veres told a local business daily that the cash-flow based budget deficit would be below HUF 1,000 bn in 2005 or some HUF 26 bn lower than the current deficit target. Although it is nice to have a lower-than-expected cash-flow budget deficit, we rather suggest to wait for ESA based budget figures, because they will tell us much more – especially in terms of the fulfilling of the country’s convergence program. While the domestic eco calendar is empty, the news related to a development of gas supply could make some noise today.
Nevertheless, the market will also await the start of real trading in core bond markets (particularly in the US).