The Hungarian forint struck its weakest level reverse US dollar in early October at 308.197. Since then, the forint has been strengthening slightly versus the US dollar. The US dollar Hungarian forint exchange rate finished the year at 295.257 down 3% across the year.

Investors have been selling out of the US dollar across the week as risk sentiment improved. President Trump confirmed that the first phase US — China trade deal will be signed on 15th January. Trump will then go to Beijing to begin talks on the second phase.

Strong indications that the US — China first phase trade deal will be signed and formally entered into with a few weeks has boosted sentiment towards the global economy. Consequently, demand for the safe haven greenback has declined.

Adding to the risk on climate, China announced that it will slash its reserve ratio by 50 basis points. The move aims to increase liquidity and lower business rates. The easing of policy in the world’s second largest economy lifted risk appetite over the Asian session.

Today investors will be looking towards US jobless claims and manufacturing data. Analysts are forecasting that US manufacturing activity remained in December was 52.5 for the final reading. A figure of 50 separates expansion from contraction. Any sign of weakness in the sector could cause the US dollar to slump.

Another Soft Year For Hungarian Forint?

Central European currencies have been broadly under pressure across the year as the US — China trade dispute has weighed on risk sentiment, only easing in recent weeks. The Hungarian forint has remained been notably weak across the year as the Hungarian central bank has kept the loosest monetary policy in the region.

The dovish Hungarian central bank is expected to keep interest rates low, with hardly any tightening expected by analysts through to the end of 2021.

Looking ahead movement of the forint will depend large on how the global economy interprets the US — China trade deal and whether the eurozone economy manages to stabilise. Analysts are not expecting a deepening of economic problems in 2020 however, growth could also remain sluggish.

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