HUF: PLNHUF Falls for 7th Consecutive Session Amid Thinned Holiday Liquidity

ECB Governing Council member Rehn told POLITICO “if the data verify the baseline and indicate that to reach our goal of 2% symmetric inflation target over the medium term, the right reaction in monetary policy should be to cut in April, we should indeed do so”.

• Ultimately, Rehn didn’t stray from a data-dependent stance, suggesting that rates could also be left unchanged if the data warranted.
• We have previously suggested that the bar to Rehn not voting for an April cut was set quite high.
• We view Rehn as an important barometer of the median Governing Council view, often striking a centrist/dovish leaning tone.
• This morning’s inflation and manufacturing PMI data do not present any meaningful hurdles to further easing.
• Rehn’s GC colleague Escriva has since noted that recent price data confirm the disinflationary trajectory, albeit alongside highlighting uncertainty centred on the U.S. tariffs.
• Demand for wider core global FI ahead of “Liberation Day” has filtered through into the EUR short end, driving a dovish move through Tuesday morning trade.
• The ECB comments flagged above haven’t had much, if any, tangible impact.
• ECB-dated OIS show 19.5bp of cuts for this month, 37bp through June, 44bp through July and 63bp through December.
• Euribor futures +4.0-9.0.
• The hawkish moves following yesterday’s BBG ECB sources report have been reversed.

SONIA FIX - Source: BBG/ICE

• 1M 4.46610 0.0003
• 3M 4.35620 -0.0003
• 6M 4.27720 -0.0023
• 12M 4.16270 -0.0022

• In contrast to the earlier bearish views on AUD, SocGen highlight that AUDUSD is almost exactly where it was on January 6, despite a 40bp narrowing in the 5-year yield differential.
• With recent Chinese data improving, and with China accounting for 9 times as much of Australia’s exports as the US does, SG believe the AUD should not be one of the worst-performing currencies against the current backdrop.