Market pessimism is back in the Hungarian FX market as the upcoming ECB meeting has more and more weighed on European high-yielding currencies. At the same time political uncertainty ahead of the first round of parliamentary elections probably plays another negative role. Interestingly, the forint currently shrugged off all comments coming from central bankers (for more see the fixed-income part), which continued to stress that the actual FX level does not necessarily mean that the weaker forint would translate into a higher price level, so forcing the NBH to act (to increase its base rate).
Regarding trading, the EUR/HUF came again closer to its 25-months high (268.0) as it bounced to the 266 territory yesterday. Actually, EUR/HUF closed at the 266.60 level, a forint above the opening level, but it already trades in the 267 zone this morning.
Today, all eyes will be the ECB and its post-meeting press conference. So, the domestic release of the February industrial production data will be past unnoticed. As concerns forint’s reaction to the ECB meeting and its press conference it will be then implied by a development in euro-zone bond markets. Should they consider Mr. Trichet’s words less hawkish than expected the downward pressure on the forint could ease. Otherwise, the EUR/HUF might test the 268.0 resistance soon.
(CSOB - Investment research)