The Hungarian forint advanced versus the US dollar for a third straight session on Wednesday. The US dollar forint exchange rate declined 0.07% to close at 298.63. The forint is paring those gains across the Asian session and in early trade in Europe.
The US dollar traded broadly lower versus its peers in the previous session as risk sentiment lifted following the signing of the US – China phase one trade deal. US stock markets, the Dow Jones and the S&P500 both reached fresh all-time highs, meanwhile demand for the safe haven US dollar declined.
Investors had been disappointed to learn that the US would not be reducing tariffs on Chinese imports immediately but waiting until after the US elections in order to ensure China’s compliance with its commitment. However, sentiment quickly improved after US Treasury Secretary Steve Mnuchin announced that phase two trade talks could start immediately. Today sentiment is mixed as investors look ahead to the second phase which will focus on more sensitive issues.
Investors will switch their attention back to US macro-economic data releases. The dollar could receive a boost from retail sales data. Analyst are expecting US retail sales to have increased 0.3% month on month in December, and improvement on November’s 0.2% increase. Strong retail sales figures is an encouraging sign for the US economic which is driven by consumer consumption. Strong retail sales can also be a leading indicator of stronger inflation levels; good news for the dollar.
Forint Investors Look To EZ Packed Calendar
With the National Bank of Hungary intent on keeping interest rates low the forint is unlikely to make any meaningful gains versus the US dollar. The central bank says that it has no exchange rate target. Even as inflation rose to a seven year high in December, the National Bank of Hungary are staying pat with interest rates, keeping an accommodative policy.
Today there is no Hungarian data for investors to digest. However, the calendar in Europe, Hungary principal trading partner, is full. German inflation figures, in addition to ECB minutes from the December meeting and a speech by Christine Lagarde could all influence movement on the forint.