The Hungarian Forint strengthened versus the US dollar for a fourth consecutive session on Tuesday. The US dollar Hungarian Forint exchange rate declined 0.15% to close the session at 299.30. The dollar is advancing in early trade on Wednesday.
The mood toward the dollar took another hit on Tuesday as investors digested the latest threats from President Trump. After landing in London for the Nato meeting, Trump announced that he was willing to wait until after the US elections next year before agreeing to a trade deal with China. Trump’s comments dashed investor hopes of a phase one trade deal being agreed within the next few weeks. Earlier in the week US manufacturing data highlighted the damage that the US – China trade dispute was having on the US economy. The dollar dropped on the prospect of another year of trade issues harming the economy
France was also in the firing line on Tuesday as Trump threatened tariffs of 100% on $2.4 billion of French produce in retaliation of France’s digital tax. The US trade representative’s office considered France’s digital tax to be discriminatory against US tech companies.
Trade headlines will remain in focus today. Investors will also turn to the slew of US data due to be released. The ISM non-manufacturing numbers and the ADP private payroll will be the most closely watched data points. Investors will want to see that the dominant US service sector is holding up despite the continued slump in the manufacturing sector. Any signs of weakness could drag on the US dollar.
Outlook Weak For Hungarian Forint
The Hungarian Forint extended gains on Tuesday after strong data earlier in the week. The manufacturing pmi beat analysts’ expectations on Monday, at a time when manufacturing across the globe is slumping amid on the ongoing US – China trade war.
In early trade today, the Hungarian Forint is slipping amid broad risk off sentiment following Trump’s threats.
There is no high impacting Hungarian data due for release today. Investors will glance towards the service sector pmi figures from Germany, a key trading partner for central European economies. Any signs of strength in the German economy could help support the Hungarian Forint. However, the outlook for the Hungarian Forint remains weak as the National Bank of Hungary is in no rush to hike interest rates despite elevated levels of inflation. The central bank is unfazed by elevated levels of inflation as it believes the weak Forint benefits the economy.