HUF: USDHUF Approaching Key Support Zone Amid Broad-Based Dollar Weakness
USDHUF has fallen 0.6% today amid broad-based greenback weakness, placing the pair closer to a cluster of lows around the 352.00 mark. A combination of dollar weakness and relative hawkishness of the NBH have prompted an impressive ~12% advance for the local currency against greenback year-to-date – more than that of any other major EMEA currency (PLN: +10%; CZK: +11%).
- For EURHUF, fresh short-term cycle lows this week mark an extension of the bear cycle that started Apr 14. A continuation lower would pave the way for a move towards support at the 400.00 handle, while key short-term resistance is at 406.95, the May 9 high.
- Focus turns to the NBH rate decision next Tuesday (May 27) where no change to the 6.50% base rate is expected, despite a further slowdown in headline inflation in April. Comments from central bank officials continue to indicate that it is highly unlikely that any changes will be made to the Bank’s hawkish guidance either, with officials committed to anchoring inflation expectations.
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GILTS: Seeing some upside traction
- Gilt is seeing further upside traction, the initial move happened on the Open, as the DMO revised its gilt remit surprisingly lower, this was followed by a quite poor set of Prelim PMIs.
- The pure next Technical level comes at 93.44 76.4% retracement of the Apr 7-9 sell-off.
But looking at Yield terms, next supports are seen at:
- 4.460% = 93.39.
- 4.363% = 94.27 (April and 2025 low).
(Chart source: MNI/Bloomberg).
US TSY FUTURES: BLOCK: Jun'25 5Y Buy
- +6,500 FVM5 108-10.5, buy through 108-10.25 post time offer at 0653:38ET, DV01 $266,000. The 5Y contract trades 111-05 last
EU-BOND AUCTION PREVIEW: On offer next week
The EU has announced it will be looking to sell the following at its auction next Monday, April 28:
- Up to E2.5bln of the 2.875% Oct-29 EU-bond (ISIN: EU000A3L1CN4)
- Up to E2.0bln of the 3.00% Dec-34 EU-bond (ISIN: EU000A3K4ES4)
- Up to E1.5bln of the 3.375% Oct-38 EU-bond (ISIN: EU000A3K4D74)
This is the first EU-bond triple tranche auction (as expected), as the EU continues to mature as an issuer. Every EU-bond auction preceding this since September 2022 has been a dual-line auction.
