HUF: EUR/HUF Extends Pullback from Post-CPI Highs, CZK/HUF Tests May Lows
EURHUF has extended the pullback from yesterday’s post-CPI highs, down 0.15% on the session. While the headline inflation figure came in below-consensus, some analysts have since noted that the underlying data remains supportive of the NBH’s cautious stance, and therefore continue to foresee a ‘hold’ decision at the July 23 meeting. A summary of post-CPI sell-side views can be found here.
- More broadly, the consolidation of major equity indices close to cycle highs and sideways price action for the USD index has provided stability to the EM FX basket. The Czech koruna underperforms regionally following this morning’s CPI release, which prompted a 0.55% move lower for CZKHUF. The cross briefly tested the May low of 15.4718 and has now extended the pullback from last month’s high to 4%.
- For EURHUF, technical conditions remain bullish with a clear break of support at 392.76, the 50-day EMA, needed to signal a reversal of this theme and open 390.79, a retracement level of the May 28 - Jun 14 bull leg. A continuation higher would instead open 398.85, the Jun 14 high.
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SWITZERLAND: UBS SNB Call Change - Expects June Hold
UBS now expects the SNB to hold its policy rate at its June 20 meeting, driven by rate differential considerations.
- They previously thought that ECB and Fed cuts by June would lead the SNB to also cut further, to prevent too much CHF strength. As rate cuts overseas are now expected later, that has "become less convincing".
- They still think that the SNB will "eventually lower its policy rate to 1.00%", which would be consistent with a neutral policy stance in 2025 amid 1% expected inflation.
- They note modest CHF appreciation risk in the short term as additional strength should be limited given the Franc already appreciated recently, even if their call of a hold materializes.
- Markets are uncertain about the outcome of the SNB policy rate decision next week, and currently price in 11.5bps of easing for the meeting. UBS also acknowledges high uncertainty.
MNI: MNI INVITE (RPT): Livestreamed Connect with ECB Luis de Guindos June 12
You are invited to listen to a livestreamed MNI Connect event with Luis de Guindos, Vice-President of the European Central Bank on June 12.
Please sign up to listen to the opening remarks and Q+A in real-time.
- Speaker: Luis de Guindos, Vice-President of the European Central Bank
- Topic of discussion: 'Euro Area Growth and Inflation Outlook'
- Date: Wednesday 12 June, 2pm-330pm London time
- This event is on the record and will run as a Zoom Webinar
To register please go to: MNI Webcast Registration
MNI EXCLUSIVE: INTERVIEW: Lockhart Worries About Fed's Long Last Mile
Former Atlanta Fed chief talks to MNI about the Fed and U.S. inflation -- on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
