The HUF got on with it, but then it hit back again

After Tuesday’s great struggle (since today the forint covered a wide range between 387.8 and 396.3 against the euro), the Hungarian currency rests near 390 against the euro and at 363 against the dollar. This means that compared to the level at 10 o’clock last night, the forint can show a strengthening of almost 1%, although with yesterday’s big fall, it is still at weaker levels than last Friday’s closing levels. The three leading stock indices of the United States produced an increase of between 1.1-2.2% today, in addition to the fact that the smaller regional banks had a big rally today after the fall of the previous days, and this in principle has a supportive effect on the risk appetite of the emerging market and also on the forint. In the meantime, however, today’s US inflation data are still high as expected, so the pressure on the Fed to fight against inflation will continue, also in view of the newly emerged financial stability concerns. This uncertain market environment can cause rapid mood swings at any time in the coming days and weeks, and in the meantime due to the Hungarian public holiday on Wednesday, lower liquidity is expected due to the lack of Hungarian banks, which may also increase volatility.

Today’s forint momentum has apparently stalled at 388, as the forint has just fallen back to 391 against the euro. According to the signs, the technical level (trend line) indicated in our previous posts has really stopped the march.

Today, there was a moderate rise in yields on the secondary market of government securities: in the 3-year and longer segment, this amount was around 20 basis points, i.e. essentially as much as the yields fell yesterday in addition to the drastic international yield fall.

By the way, today’s increase in Hungarian yields could already be observed at the discount treasury bill auctions in the morning, which showed a very strong demand compared to the last few weeks, since the 15-15 billion HUF 3- and 6-month notes were offered for HUF 76 and 112 billion, respectively, but only 15 of these were received. -15 billion was accepted by the ÁKK and it was also unusually high: an average return of 15.09% and 15.48% respectively.

The forint was able to strengthen up to the (support) level of around 387.9 indicated in our previous post, and then fell back to above 389 against the euro. Right now, the trading is fluctuating around 389.2, but in a short time they are pulling 1-2 units on the exchange rate. The dollar exchange rate is currently at 363.2 on the interbank market.

The wave-like strengthening of the forint in the afternoon lowered the exchange rate of the euro to 388, i.e. essentially to where the downward trend line drawn below stretches at 387.9. This is the line drawn to this year’s local EURHUF highs, so it is now necessary to watch whether the exchange rate manages to pass downwards.

In the meantime, the dollar started to strengthen against the euro after the publication of the inflation data, the quote is slowly approaching 1.07 again, which means a 0.25% strengthening of the dollar.

the forint has come a long way again, since the euro exchange rate, which was still above 396 in the morning, fell below 390, and the level of 389.6 is already 0.9% lower than on Monday evening. According to the signs, some of the investors who took positions against the forint yesterday are withdrawing due to the still high level of interest rates.

In the afternoon, following the publication of the American inflation data, the HUF strengthened to 391.25, which is almost half a percent lower than last night’s level.

At the same time, the dollar also seems to be turning around, after the previous strengthening, it is already in a minimal weakening.

The headline inflation figure of 6% was announced in the United States for February, as expected, and core inflation was 5.5% on an annual basis, which therefore continues to put pressure on the Fed to simultaneously try to fight against inflationary risks and to take into account also for financial stability risks in the banking system. In addition to this double dilemma, the euro/dollar did not show any major fluctuations: the exchange rate remained around 1.0720.

And the HUF is at weaker levels again after the wave of strengthening in the early afternoon: around 393.5-394 against the euro, around 366.5-367 against the dollar.

It is worth noting that with the fall of the forint this morning, the EURHUF turned above 396, where the 38.2% Fibonacci correction level of the great forint strengthening seen from last fall to February this year is located. If the EURHUF breaks through this 396.3 level, then the round 400 level could be the next resistance (rather only psychologically important), and above it the 200-day moving average at 400.8.

By midday, the euro fell to around 392, which means a 0.2% strengthening of the forint compared to last night.

In the morning, the forint strengthened to around 394 against the euro, but it is still down 0.25% compared to last night.

In the meantime, the forint weakened to 396.3, so it is already down 0.8% today. In the region, the Polish zloty is weakening by 0.3% and the Czech koruna by half a percent.

A huge weakening of the forint unfolded in yesterday’s trading, the quotation broke through all nearby resistance levels, the next decisive level is at 399.64 – read Equilor’s technical analysis on Tuesday. This may be available soon based on the current technical picture, although the quote has jumped out of the Bollinger bands. The 200-day moving average is also located near the mentioned level, so there is a good chance that the movement may stop there. Of course, depending on international developments, it cannot be ruled out that the exchange rate will exceed this in the future, in any case, the volatility may be extremely high in the next period.

Support: 387.28 (MA 50), 389.03 (Fibo 76.4%), 393.00 (trend line)
Resistance: 399.64 (Fibo 100%), 400.77 (MA 200)

After a short pause, the weakening of the forint continues, the euro is again close to 396, which means a 0.7% weakening of the forint compared to Monday evening.

By morning, the HUF corrected back to 394.25 against the euro, but it is still 0.3% weaker compared to yesterday.

The euro-dollar exchange rate is almost frozen, there is hardly any movement from around the 1.07 level, perhaps the American inflation data in the early afternoon can bring about a change in this.

On Tuesday, the MNB announced its one-day rapid deposit tender with an unchanged interest rate of 18%, so the benchmark rate has not changed since mid-October. Of course, the central bank would have no reason to change in the current bloody times, since the forint is weakening as a result of the news coming from the American banking sector.

On Tuesday morning, the euro-forint quote quickly passed the level of 395, so the Hungarian currency is already weakening by 0.7% at 395.6. This again underperforms the Polish zloty and the Czech koruna by 0.2%.

Although it approached it several times on Monday, the forint’s weakening against the euro stopped several times at the resistance of 394, but at 8 am on Tuesday, the exchange rate fell to 394.1. The last time the Hungarian currency was at this level was at the very end of January.

On Tuesday morning, the forint was around 394 against the euro, which meant a 0.3% weakening compared to Monday night in terms of the Hungarian currency. Yesterday, the forint showed a rarely seen drop, as it started the day near 380 in the morning, and then the euro rose by more than ten units. Primarily, the problems of the American banking sector have a sensitive effect on the exchange rate of the forint, but there was also a strong underperformance compared to regional competitors, which showed that there were specific domestic factors behind the fall. The main question of the next few days may be whether the market will calm down or whether the serious decline will continue today. In the latter case, we can slowly become friends again with the euro exchange rate starting with four. Today, in addition to the news from the banking sector, it will be worth paying special attention to the development of the American inflation data, which may also bring more serious movement to the market. Against the dollar, we are now at 368.3, while the British pound costs HUF 447.45.

The movement of the forint is most often compared to its regional competitors, on Tuesday morning the Polish zloty and the Czech crown will start the day with a minimal weakening against the euro. In the emerging market, the Turkish lira is currently stagnant against the dollar, while the Russian ruble is starting to gain more than half a percent.

The problems of the American banking sector were of course also reflected in the euro-dollar exchange rate, the weakening of the dollar was the main trend in recent days. This morning, however, this seems to be turning around, the quotation has recovered to around 1.07, which for the time being represents a 0.3% strengthening of the dollar compared to Monday evening. The Japanese yen weakened 0.35% against the dollar, while the British pound opened 0.1% lower.

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