USD/HUF: Hungarian Forint Weakens For 4th Straight Session

The Hungarian forint weakened against the US dollar for a third straight session on Thursday. The Hungarian forint US dollar exchange rate closed 0.5% higher at 299.44. The pair is seen extending those gains in early trade on Friday.

The US dollar traded with a positive bias on Thursday as geopolitical concerns in the Middle East eased. US economic data continued to be supportive of the greenback. Initial jobless claims rose at a better than forecast, weekly 214,000. The data adds to growing evidence that the US economy is holding up well.

Today investors will be look towards the US Department of Labour’s jobs report, the non-farm payroll report. Analysts are forecasting 164,000 new jobs were created in December. This is below November’s stellar 226,000 jobs. The unemployment rate is forecast to hold steady at 3.5%. Hourly earnings are due to increase 0.3% following a 0.2% increase in November. Annual earnings are expected to remain stable at 3.1%.

The non-farm payroll is the most watched monthly economic release by market participants. The ADP private payroll report is closely correlated to the NFP, although occasionally the two numbers diverge sharply. The ADP report for December was unexpectedly strong raising the probability of a strong December NFP.

Hungarian GDP To Slow In 2020

Demand for the Hungarian forint was weak for yet another session on Thursday as investors looked to the year ahead. Hungary is expected to see economic growth across 2019 in the region of 4.9%. Analysts are expecting Hungarian economic growth to slow sharply in 2020 which is weighing on the forint.

A sharp slowdown in economic growth is expected because, according to analysts, firstly, the labour market has reached full employment. Secondly, investment activity is expected to fade and thirdly industry is facing a significant decline in orders, translating to lower export activity.

Analysts are expecting inflation to remain elevated at 3.5% but the National Bank of Hungary are unlikely to tighten policy. The central bank didn’t surprise in 2019 and they are not expected to in 2020. The NBH are expected to continue adopting a wait and see approach.

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