15:05:

The slightly worse than expected Q2 GDP data in the United States triggered mildly negative market responses. US economic growth slowed to 2.4% in April-June, according to the first estimate figure published by the Commerce Department today, while most analysts projected a 2.5% growth. The economy has grown by 3.7% in Q1.

European stock exchanges extended their losses and US stock futures are also in the negative zone. The forint has started to ease in the past few minutes and went north of 286 to the euro.

4:20:

Pressure eased on the forint as markets are holding their breath for the US GDP data to be released at 14:30 CET.

EUR/HUF gained back to around 285.30 from 286.50 in the early session.

12:20:

Around noon, the forint breached 286 northbound, which means it has shed 1.4% versus the euro since late Thursday.

The HUF depreciated also to the Swiss franc and is now approaching 212. The forint’s loss is also attributable to the CHF’s gains

The forint is an underperformer in the region, having lost 1.1% to the euro already. The past few hours make it clear that the HUF is much more exposed to shifts in global investor sentiment than its regional peers.

A change in market sentiment may damp demand for Hungarian debt, leaving the country more vulnerable if it does not have the IMF safety net, Bloomberg cited Pasquale Diana, an economist at Morgan Stanley in London, as saying in a note to clients.

Deputy Economy Minister Zoltán Cséfalvay said a surge in demand for Hungarian debt shows rating companies were "behind the curve" in threatening to lower the country’s credit grade. Hungary sold HUF 57.5 billion of bonds yesterday, compared with the HUF 50 billion forint planned.

On 20 July, three days after the IMF walked out from the fiscal review talks with Hungary, the Government Debt Management Agency (ÁKK) raised less than targeted at a debt auction for the fourth time this year. It sold HUF 35 bn of 3-month Treasury bills, compared with the HUF 45 bn planned.

Prime Minister Viktor Orbán has said he will negotiate with the IMF after the EUR 20 bn credit facility expires in October, and Cséfalvay said the country’s debt may no longer need that support.

"The notion that Hungary doesn’t need the IMF and it can fund itself from the market is a dangerous one and applies only if inflows into emerging markets and risk appetite both remain good," Pasquale said."

Source: Portfolio Online Financial Journal