HUF: EURHUF Moderately Softer Following CPI But Remains Close to Key Resistance
EURHUF has softened moderately following this morning’s inflation data, with the cross down around 0.1% at typing following yesterday’s impressive >1% rally. September’s CPI data was very much in-line with expectations – prices were unchanged on a monthly basis, translating to a +4.3% Y/Y print and the 10th consecutive reading above the central bank’s +3.0% +/-1ppt target range. EURHUF breached key resistance at 393.30 yesterday, the 50-day EMA, and a clear break of this average would set sights on the 395.00 handle next.
- The central bank project CPI to remain in the 4.0-4.5% range this year, in part due to the extension of the profit margin caps on food and personal care products, and is expected to gradually moderate within the tolerance band in early 2026 and reach the 3% target by early 2027.
- NBH’s Adam Banai noted yesterday that underlying price pressure, disregarding the government’s price curbs, is 1.5ppts higher than the headline figure, while Deputy Governor Zoltan Kurali stressed that inflation must return sustainably to within the tolerance band. The officials looked to reiterate the need for tight policy amid growing calls from the government for lower rates. The NBH meet next on October 21.
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BONDS: Japanese Investors Bought JPY2.6trln of USTs In July
Japanese investors purchased JPY2.6trln worth of US Treasuries in July, according to latest Balance of Payments data, more than unwinding the JPY605bln of net sales seen in June. Year-to-date, Japanese investors have purchased JPY5.6trln of USTs.
- It highlights that despite ongoing US political/trade policy uncertainty and Fed independence concerns, there aren’t many alternatives to US assets for a country with as large a current account surplus as Japan (almost 5% of GDP as of Q2 2025). A reminder that the current account surplus must by definition be balanced by capital outflows in the form of direct/portfolio investment abroad (alongside other financial account components).
- Elsewhere, Japanese investors purchased around JPY335bln of German and French bonds in July.
- Over the next few months, it will be interesting to see if French flows are impacted by the latest uptick in political uncertainty. After President Macron called snap French legislative elections in May 2024, Japanese investors became notable sellers in OATs (see charts).
- Japanese investors sold JPY308bln of BTPs in July, while continuing to be steady net buyers of Gilts. Like France, it remains to be seen how Gilt flows are impacted by recent political developments ahead of the Autumn budget.
IRELAND BOND AUCTION PREVIEW: On offer this week
Ireland has announced it will be looking to sell a combined E1.0-1.5bln of the following at its auction this Thursday, September 11:
- the 2.60% Oct-34 IGB (ISIN: IE000LQ7YWY4)
- the 3.00% Oct-43 Green IGB (ISIN: IE000GVLBXU6)
COMMODITIES: Last Week's Gains Reinforce Bullish Conditions for Gold
A bear cycle in WTI futures remains intact and the latest bull phase appears to have been a correction. The pullback from last Tuesday’s high highlights a possible reversal and the end of the corrective phase. Initial resistance to watch is $66.56, the Aug 4 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. A stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low. Gold remains in a clear bull cycle and last week’s gains reinforce current conditions. The yellow metal has breached a key resistance at $3500.1, the Apr 22 high, delivering a fresh all-time high. The break also confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3623.1, a Fibonacci projection. Initial firm support lies at $3440.0, the 20-day EMA.
- WTI Crude up $1.05 or +1.7% at $62.9
- Natural Gas up $0.1 or +3.15% at $3.142
- Gold spot up $24.34 or +0.68% at $3611.69
- Copper up $1.1 or +0.24% at $456.05
- Silver up $0.16 or +0.4% at $41.1771
- Platinum up $19.42 or +1.41% at $1398.84
