The Hungarian forint strengthened versus the US dollar on Tuesday, coming within a breath of 300.00. The US dollar Hungarian forint closed 0.4% lower at 298.50. The dollar is advancing in early trade on Wednesday,
The US dollar has had a relatively quiet week so far, however that is about to change. The dollar drifted lower on Tuesday amid a lack of relevant data and as investors waited for signs as to whether the Trump administration will hike tariffs on Chinese imports on December 15th.
Today investors will switch their focus back to the US economic calendar with the release of US inflation figures. The dollar could get a boost as analysts expect consumer prices to have increased in November to 2%, up from 1.8%. Core inflation is expected to remain steady at 2.3%. These figures would be at or above the central bank’s 2% target. Strong inflation combined with last week’s solid labour market figures support the Fed’s assessment that the US economy is on a firm footing.
The Fed will be in focus as investors look towards the FOMC rate announcement. The Fed are not expected to cut interest rates after three insurance cuts so far this year. Instead investors will focus on the pursuant press conference and the dot plot for clues as to where the Fed see monetary policy going in the future. Any hints from the Fed that the next move could be a rate rise could send the dollar higher.
Forint Rises Post Inflation Data
The forint was on the front foot in the previous session after headline inflation accelerated significantly and core inflation retreated. Easing consumer prices increased 3.4% year on year in November, up from 2.9%. However, core inflation which excludes the more volatile items such as food and fuel came in flat at 4%. Moreover, core inflation on a monthly basis actually declined. This will provide some comfort to the National Bank of Hungary who are keen to keep monetary policy accommodative.
There is no Hungarian data due for release today Investors will look to the European Central Bank rate announcement on Thursday.