The Hungarian forint firmed slightly thanks to a stronger Polish zloty yesterday, but the price action was not significant. The EUR/HUF pair dipped in early trade hitting the intra-day low at 251.16. The pair shrugged off very an unfavourable outcome of Hungary’s Purchasing Manager Index (it fell from 58 in December to 53.7 in January) and developed a sideways pattern till the end of the session.
Today, a government bond auction and ECB press conference will be in focus. We consider an outcome of a 3Y and 15Y as uncertain, because supplied amounts are quite high and a negative development in core bond markets puts additional pressure on emerging markets. As concerns the ECB, Mr. Trichet will probably sound hawkish today, which will not be a positive news for the high-yielding forint. Thus, in our view risks are skewed to the downside for the forint today. The EUR/HUF will probably turns north, but we believe the 253.0 resistance will remain intact.
(CSOB - Investment research)