The Hungarian Forint headed higher versus the US dollar for the sixth consecutive session on Thursday. The Forint pushed to a four-week high against the greenback amid strong Hungarian retail sales figures and weak demand for the UD dollar. The pair is holding steady in early trade on Friday. This week alone the Forint has advanced just shy of 2%.
The US dollar trended lower on Thursday despite broadly stronger than forecast macroeconomic stats. Instead investors were showing signs of uncertainty amid mixed trade signals and ahead of the US non-farm payroll report.
Analysts are expecting 180,000 jobs to have been created in the US November, well ahead of the 128,000 created in October. However, leading indicators such as the ADP private payrolls missed expectations and the employment component in the ISM manufacturing and non-manufacturing reports declined in November. This doesn’t bode well for non-farm payroll headline job creation figures today.
The report is also expected to show that unemployment remained steady at 3.6% and hourly wages ticked higher to 0.3%, up from 0.2%. Any signs of weakness in the NFP report could weigh on demand for the greenback.
Retail Sales Impress, Can Industrial Production?
The Hungarian Forint was on the front foot in the previous session following better than expected Hungarian retail sales data. Sales increased a strong 6.2% year on year in October, an acceleration from September’s 5.7%. Non food sales, so electronics, cosmetics and manufactured goods contributed the most to retail sales growth, increasing 9.8% year on year. This increase is mainly thanks to an improved financial situation in households and increasing consumer confidence.
Strong retail sales are important because they can be an inflationary factor. Strong retail sales often indicate higher inflation in the future. Higher inflation encourages a central bank to hike interest rates to control inflation, which in turn boosts demand for the currency. For this reason, the Forint advanced.
Investors will remain focused on the Hungarian economic calendar today with the release of industrial production figures. Analyst are expecting industrial production to have increased 12.3% on an annual basis in October, up from 11.1%. Further signs of strength in the Hungarian economy could lift the currency higher.