The US dollar rallied over 0.3% versus the Hungarian Forint on Friday. The pair closed the session at 295.48 snapping a seven-session losing streak. The dollar is advancing versus the Hungarian forint in the Asian session on Monday.
The dollar advanced at the end of the previous week as diminishing risk appetite overshadowed dismal US manufacturing data. The ISM manufacturing figures showed that the sector contracted at the fastest pace since the financial crisis. The index printed at 47.2 in December, down from 48.1 in November and well short of the improvement to 49 that analysts had forecast. The data suggests that the slump in the sector, which has been on play for a year, is showing few signs of letting up. Economists attribute the slowdown in the sector to the US – China trade dispute. With China and the US due to sign phase one trade deal in the coming weeks, investors are hopeful that the sector could soon turn a corner.
Whilst data dragged on the US Dollar reduced risk sentiment supported the greenback and continues to lift the US dollar in the new week. As the situation between US and Iran deteriorates investors are increasingly looking to invest into safe haven assets such as the reserve currency of the world the US dollar.
Hungarian Wage Growth Up Next
Iran has said that it will not longer abide by any limits on enrichment of Uranium, meanwhile Trump announced that he has identified 52 Iranian sites that the US would target if Tehran acts as it threatened to and hits back over the killing of its General Qasseem Soleimani. Investors will be watching closely as to how the situations develops. Signs of tensions elevating could further boost the safe haven dollar. Meanwhile, currencies that are perceived to be riskier such as the Hungarian forint and other Eastern European currencies could come under pressure.
Looking out across the week, the Hungarian economic calendar is full after several weeks of few releases over the Christmas period. Today investors will be looking towards Hungarian wage growth data. Analysts are expecting wage growth year on year to dip slightly to 11.1% in October, down from 11.8% in September. Strong wages growth is inflationary and could help underpin the Hungarian forint.