The Hungarian forint rebounded after Wednesday’s sell-off triggered by Moody’ decision to put Hungary’s debt on a negative outlook. The forint was able to firm despite another negative news came from another (though less important) rating agency - the Japan Credit Rating Agency. It has downgraded Hungary's long-term local currency debt rating to A from A+ yesterday. Looking at the intra-day trading: the EUR/HUF opened at 253.69 and headed gradually south falling even to the 252 zone. The pair closed at just above the 253 figure. From the technical point of view, it is important that the pair EUR/HUF has remained above the neckline of inverted Head&Shoulders formation (252.35), which still points to a bearish outlook for the forint.
Today, the forint might benefit from opinion polls, which were released in the afternoon yesterday. They show that support for less populistic Hungary's governing parties has increased from a month earlier and the race is even tighter (preferences for the two main parties are currently at the same level, while the support for the junior coalition party is just below a 5% treshold for entry to parliament). On the other hand, a negative development in core bond market is a bearish signal for the high-yielding forint. Thus, the forint might turn both directions and we do not have a favourite scenario for today session.
(CSOB - Investment research)