Topic: Hungary HUF Interest Rate June 22 2021
What does the data mean to the market?
The Hungarian National Bank Monetary Policy Committee's decision on where to set the benchmark interest rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the HUF - (Hungarian Fornit), while a lower than expected rate is negative/bearish for the HUF.
Historic deviations and their outcome
July 21 2020 June 23rd 2020, We got a negative -0.15bps (basis points) cut to the interest rate which gave a nice slow move on USDHUF, with many opportunities to enter the market!
See the price action here
I will use forecasts of:
Base Rate Announcement 0.9
Today's trade plan
Today we have a wide range of estimates as the Hungarian Central bank is expected to start hiking rates, but how much is unclear. Today we have the following forecast ranges.
High Forecast = 1.1
Low Forecast = 0.6
Average Forecast = 0.88
I will use a forecast of = 0.9 (Previous intetest rate = 0.6)
If we don't see a change to the interest rate and it remains at 0.6%, I will class this as a -0.3% deviation from the forecast of 0.9% and will take a sell. I would expect to see a 300 pip move.
If we see a hike to the interest rate to 1.1% or more. I will class this as a +0.2% deviation from the forecast of 0.9%, and I will take a buy and expect to see a 200 pip move.
Hope this helps but please do your own analysis!!
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