HUF: EURHUF at 3-Month Low But ING Becoming More Cautious at Current Levels
Jun-27 11:14
As noted above, the supportive macroeconomic backdrop continues to assist regional FX, and has allowed EURHUF to extend its weekly decline to over 1%. The cross is currently trading at its lowest level since March, approaching trendline support drawn from the January and May 2024 lows (see chart below). A more sustained move lower would expose year-to-date lows at 397.06.
- As EURHUF continues to move lower, ING caution that the cross is getting into territory where they are becoming less bullish on the forint. At the same time, they think that the central bank will ignore the temporary drop in inflation and wait until next year to start rate cuts. However, global conditions led by core rates are pushing HUF rates down already, which should eventually hinder further HUF gains, they say.
Source: Bloomberg Finance L.P.
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US DATA: Composite MBA Applications Dip As Swap Spread Re-Widens A Touch
May-28 11:13
- MBA composite mortgage applications dipped -1.2% last week (sa) after a heavier -5.1% the week prior.
- The breakdown was more mixed than usual, with new purchase applications rising 2.7% after -5.2% whilst refis saw further weakness with -7.1% after -5.0%.
- Relative levels: composite at 50% of 2019 average levels, new purchases at 63% and refis at 37%.
- The 30Y confirming mortgage rate increased 6bps to 6.98% as it started to reflect what has been a sharper climb in 10Y swap rates although one that fizzled out last week with no change in average rates for the latter.
- It saw the confirming rate to swap spread rise 6bps to 302bps having tightened 19bps from 3.15% to 2.96% in the first half of May.
BONDS: US and UK Roll pace (updated)
May-28 11:06
Roll pace Update, pretty much all done. All the Volume in US Treasuries is just spread related, and September is front Month.
- WNA: 86%%.
- USA: 87%.
- UXY: 81%.
- TYA: 82%.
- FVA: 82%.
- TUA: 81%.
- Gilt 95%.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Is Intact
May-28 11:04
- In the FI space, recent gains in Bund futures suggest the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. This week’s climb reinforces a bullish theme. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
- A bear cycle in Gilt futures remains in play and last week’s move lower reinforces the bearish theme. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.
