HUF: EURHUF Settles in Relatively Narrow Range Ahead of ECB

Narrow ranges across G10 currency markets and stability in the EUR keeps EURHUF (-0.2%) contained within Wednesday’s ranges ahead of the ECB rate decision later today. Reports of President-Elect Donald Trump inviting President Xi Jinping to his inauguration could be seen as a sign of a more benign approach to trade tariffs, potentially boosting sentiment for EM assets. Meanwhile, weakness in the Polish zloty sees PLNHUF trade lower for the fourth consecutive session, now down ~1.5% compared to last week’s all-time high.

• Given the thin regional data slate for the remainder of the week, focus will be on the ECB rate decision this afternoon where a third consecutive rate cut is expected. The prospect of a 50bp cut, although appearing unlikely, cannot be entirely discounted.
• In Hungary, attention will then turn to the final NBH meeting of the year on Dec 17 where no change to the base rate is the likely outcome.
• Note that Prime Minister Viktor Orban meets with Turkish President Recep Tayyip Erdogan today as part of the government’s self-proclaimed “peace mission”. Orban met US President-elect Donald Trump on Monday and held a phone conversation with Russian President Vladimir Putin on Wednesday.