The US dollar is higher against the Hungarian forint on Thursday morning with riskier Central and Eastern European currencies shunned in a flight to safety that benefited the US dollar. Overall markets have been back and forth about the possible implications of the coronavirus. Today has seen the mood darken again with Asian and European stock markets sharply lower and a preference for havens like gold.
USD/HUF was higher by 46 pips (+0.15%) to 306.72 with a daily range of 306.08 to 307.39 as of 10am GMT. Price movements in the currency pair have been volatile today moving in a wide 100 pip range between 306 and 307.
The meeting of the US Federal Reserve and its decision over interest rates would typically be the biggest driver in the days that follow, however today that has not been the case. A risk-off tone across markets has put a floor under the dollar as investors look for safety amid the coronavirus outbreak.
The death toll and number of cases of the virus continues to rise, adding to the human tragedy. But the number of airlines cancelling flights to and from China including British Airways, is adding to the sense that the virus is causing massive economic harm. The economic impact is not just on China but on all the other counties that want to do business in China and are being restricted from doing so.
The Federal Reserve chose to keep interest rates at the current 1.50-1.75% range as expected so it was a more cautious official statement and press conference from Chair Jay Powell that garnered most attention.
In reference to what he called a downward spiral in inflation, Powell said “We have seen this dynamic play out in other economies around the world, and we are determined to avoid it here in the US” He added “We’re not satisfied with inflation running below 2%, particularly at a time such as now where we’re a long way into an expansion.”
