USD/HUF: Forint Rises As Hungarian Retail Sales Jump

After falling versus the Hungarian forint for the past four straight sessions, the US dollar is consolidating losses in early trade on Wednesday. The US dollar (USD) Hungarian Forint (HUF) exchange rate closed Tuesday’s session -0.85% lower following an emergency Federal Reserve rate cut. The pair has lost over 3.3% across the past week.

At 09:15 UTC, USD/HUF was trading just -0.1% lower at 300.31 as it continues to fall away from the all-time high of 314.00 struck in mid-February.

Can Strong Consumer Spending Overshadow Weaker Manufacturing?

The Hungarian forint is strengthening following impressive retail sales data. Retail sales in Hungary rose by 7.6% in January on an annual basis. The strong reading comes following a 6% increase in retail sales year on year in December and 7.3% increase in November. The trend in retail sales in strong, indicating that household consumption is high and supporting economic growth, while the manufacturing and industry sectors of the economy come under pressure.

Earlier in the week manufacturing pmi data showed that activity in the sector almost stagnated at 50.1 where the figure 50 separates expansion from contraction.

Investors will now look ahead to industrial production data which is due on Friday. Analysts are expecting industrial output to rebound in January after declining -1.2% year on year in December.

Dollar Rebounds After Rate Cut

As the dust settles on the Fed’s rate cut, the dollar is moving broadly higher versus its major peers. Federal Reserve Chair Jerome Powell made at 50 basis points emergency rate cut on Tuesday, in a bid to support the US economy in the face of the coronavirus threat to economic stability. The dollar plunged following the cut. However, the effect has been relatively short lived.

The dollar is holding its ground on Wednesday as investors digest a strong performance by centrist candidate Joe Biden on Super Tuesday’s Democrat presidential nominee battle . Barack Obama’s vice president, Joe Biden, is now in a two-horse race with Bernie Sanders.

Looking ahead, US dollar investors will swing their focus back to the economic calendar with ADP private payroll data and ISM non-manufacturing PMI due to be released later.

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