HUF: USDHUF Back Below 50-Day EMA as Forint Extends Recovery
The Hungarian forint has extended its recovery from Monday’s lows, with the currency nearing the January highs and its highest level against the euro since November. Given the outsized weakness for the likes of HUF and CZK to dollar strength earlier in the week, it is unsurprising that the forint has stood to benefit more significantly from the reversal lower for the greenback, underlining the HUF’s particular sensitivity to global risk sentiment.
- Indeed, USDHUF is around 2.6% lower compared to Monday’s highs - slightly outpacing the decline of the DXY index - and is trading below Friday’s closing levels. The pair is also back below the 20- and 50-day EMAs, reinstating a bearish threat and keeping focus on 387.56, the Jan 24 low.
- Given firm expectations over the path of NBH policy in the coming months (i.e., no change to the base rate until after March at the very earliest), Hungarian rates markets have largely looked through this week’s growing trade risk. 3x6 FRAs continue to indicate no change to the base rate over the next 3 months, while longer-dated contracts have seen a slight dovish repricing. Among sell-side, views remain mixed over the exact timing of when monetary authorities will resume policy easing.
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STIR: 100bp Of ECB Cuts Priced For ’25 After Hesse CPI
Firmer-than-expected Hesse CPI data out of Germany (based on comparisons with the national CPI expectations) drives further hawkish repricing on the ECB-dated OIS strip, with 100bp of cuts now priced through ’25.
- This compares to 115-120bp seen just before the Christmas break.
- ~26bp and ~27bp of cuts show over the next two ECB decisions, respectively, as market-implied odds of an upsized rate cut are pared further.
- A reminder that methodology alterations and regional holidays means that Hesse provides the only major regional CPI release ahead of this afternoon’s German national CPI release.
| ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR Rate (bp) |
| Jan-25 | 2.661 | -25.8 |
| Mar-25 | 2.393 | -52.6 |
| Apr-25 | 2.204 | -71.5 |
| Jun-25 | 2.080 | -84.0 |
| Jul-25 | 2.038 | -88.1 |
| Sep-25 | 1.971 | -94.8 |
| Oct-25 | 1.939 | -98.0 |
| Dec-25 | 1.919 | -100.0 |
- Euribor futures are 3.0-5.5bp lower at typing.
- ERZ5 8.0 off its November low and 11.0 off its October low.
- SOFR/Euribor and SONIA/Euribor Dec ’25 spreads continue to move away from their late ’24 highs.
Fig. 1: SOFR/Euribor and SONIA/Euribor December ’25 (Z5) Spreads
Source: MNI - Market News/Bloomberg
EQUITIES: European Tech Sector extends big gains
The Tech sector leads in Europe with SX8P up 2.9% on the day, a big early move since the Open, and initial resistance is at 839.24, the December high and the highest printed level since mid October.
(Chart source: MNI/Bloomberg):
MNI EXCLUSIVE: MNI Speaks with Chinese Economist on Economy/US Relations
- A Chinese economist who has participated in meetings with President Xi Jinping speaks about U.S.-China relations and China's economy, in a two-part interview -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
