The Hungarian forint is on the rise on Friday, extending gains after snapping a 6-session losing streak in the previous session. In a rare show of strength, the Hungarian forint pulled off all time lows and pushed 0.4% higher versus the US dollar on Thursday and a further 0.5% higher so far this morning. The US dollar forint exchange rate is trading at 309.76 at 09:30 GMT, down from the all time high of 313. 04.
The forint is advancing following the release of Hungarian GDP data. Data revealed that the Hungarian economy grew 1% quarter on quarter. This was ahead of the consensus estimate of 0.8% but a touch behind the 1.1% growth recorded in the previous quarter. On a yearly basis GDP grew 4.5%, above forecasts of 4.2%.
The data comes less than 24 hours after the European Commission raised its projection for Hungary’s GDP growth to 3.2%, up from 2.8% as the business cycle matures. The EC foresees a deceleration in investment growth and a slowing labour market which could put pressure on wages and household consumption. The EC’s forecast is well below the government’s 4% growth projection.
Dollar investors are looking ahead to several influential US data release later in the session. These include retail sales, industrial production and consumer confidence.
Recent macro data from the US has revealed the US economy to be on a steady footing. Federal Reserve Chair Jerome Powell also reiterated this week that he considers monetary policy to be appropriate at its current level.
In the previous session, data showed that US inflation increased at the lowest monthly rate in four months. Inflation edged 0.1% higher month on month in January, below the 0.2% forecast. However, on an annual basis inflation crept up to 2.5%, up from 2.3%, ahead of the Fed’s 2% target.
Even so, the Fed’s preferred measure of inflation, the PCE, is still only 1.6% higher year on year. This means the Fed are unlikely to hike rates. Even more so given that the economic impact of coronavirus is still so unclear.