USD/HUF: Hungarian Forint Advances Ahead of NBH Rate Decision

After declining versus the US dollar in the previous session the Hungarian forint is on the rise. The US dollar forint exchange rate is moving further away from the all-time high reached last week.

The pair is trading down -0.55% at 310.10 as of 09:15 GMT as investors await the National Bank of Hungary’s interest rate decision and as investors raise the probability of the Federal Reserve cutting interest rates.

Hungarian Forint Investors To Watch NBH Communication Line

The Hungarian central bank meeting is likely to be a key event. Following a jump in inflation to 4.7%, the National Bank of Hungary verbally intervened saying it will do whatever necessary to keep inflation under control. This was a big move from the infamously dovish central bank. The market’s reaction was immediate.

Market participants are not expecting any changes to monetary policy today. However, following the “whatever it takes comments” the communication line will be closely eyed for clues as to what the central bank is planning or how they see the outlook.

Dollar Drops On Rate Cut Fears

The dollar was on the back foot versus its major peers in the US session Monday and is extending those losses as trading begins on Tuesday. The decline in the greenback comes as investors increased the probability of the Federal Reserve cutting interest rates, sooner rather than later, in an attempt to soften the blow from coronavirus.

The global number of coronavirus cases has now breached 80,000. The number of cases in South Korea has soared and the number of cases in Italy also continues to rise. The financial markets are realising that this isn’t solely an Asia issue and the global economic impact could be much worse than initially feared. US stock markets dived over 3% on Monday in the worst one day loss since 2016.

Investors are now pricing in a 23% probability of a rate cut in March and now a 50-50 chance of an interest rate cut by the Federal Reserve in April.

The dollar could see some support later today with the release of consumer confidence figures. Analysts are expecting household morale to tick higher in February.

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