USD/HUF: Hungarian Forint Extends Gains For 2nd Straight Session

The Hungarian forint is extending gains versus the US dollar in early trade on Friday. The forint is up 0.15% adding to gains of 1.2% versus the US dollar on Thursday, pulling up further from record lows.

The USD/HUF exchange rate hit 307.93, the strongest level for the forint in three weeks. Across this week, the forint has advanced 0.8% versus the US dollar.

Hungarian Forint Advances Despite GDP Slipping

The forint is advancing despite a slight slow down in economic growth. Hungarian GDP printed at 4.5% year on year in the final quarter, a touch down from 5% in the previous quarter but in line with expectations.

The data comes after Hungarian unemployment data impressed yesterday. The unemployment rate ticked higher to 3.4%, up from a record low of 3.3%. Economists broadly expect to see the unemployment rate stabilise around these levels. Wager growth is also expected to remain sound and will provide a boost to consumption.

Dollar Renounces Safe Haven Status

Investors couldn’t sell out of dollar assets quick enough on Thursday. The US stock market the Dow Jones had its worst one-day decline in history, as it plunged 1100 points. The US dollar relinquished its safe haven status, dropping versus all major peers except for the Canadian dollar.

So why are investors sell out of the US dollar? Investors now fears that the US will be the next to experience a widespread outbreak and sharp rise in the number of cases of the killer virus. The CDC warned earlier in the week over a more widespread outbreak. President Trump also failed to calm jittery investors, who now expect a big hit on the US economy and the Federal Reserve to act.

According to the CME Fedwatch, investors are now assuming a 71% probability of the Fed cutting interest rates in March. This is up from 41% 24 hours ago and 23% earlier this week. Investors are also expecting the Fed to cut rates three times this year.

Today investors will remain glued to coronavirus headlines. Investors could also glance towards the release of personal consumption expenditure, the Fed’s preferred measure of inflation. However, data is unlikely to be a key driver in current market conditions.

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