The Hungarian Forint (HUF) is under pressure in early trade on Wednesday as coronavirus fears hit risk appetite again. After declining 0.24% versus the US Dollar (USD) on Wednesday, the Forint is extending those losses by an additional 0.15% on Thursday, at the start of the European session.
At 09:15 UTC, USD/HUF is trading at 301.92. This is in the middle of the daily range 302.23 – 301.57.
Coronavirus Fears Drag on Hungarian Forint
Riskier assets were under pressure on Thursday, including Central and Eastern European currencies such as the Hungarian Forint. Investors are once again growing nervous over the negative impact of coronavirus on the global economy. California declared a state of emergency and Italy has shut all the schools in the country for the next few weeks as the number of cases there breaches 3000. Big multinationals such as Microsoft and HSBC are putting into action contingency plans.
The Hungarian economy is already showing signs of a hit as Hungarian companies face component shortages because of coronavirus’ impact on supply chains. This has fanned a slowdown that was already in place, according to the head of the Confederation of Hungarian Employers and Industrialists.
Economists are forecasting that Hungarian growth will slow to 3.5% this year, down from 5% last year.
US Dollar Broadly Lower On Further Rate Cut Anxieties
The dollar was trading higher versus the Hungarian forint but lower versus its major peers as investors eyed further rate cuts from the Federal Reserve. The Fed made an emergency 50 basis points rate cut at the start of the week to support the US economy amid expectations of a coronavirus hit to economic growth. This leave the rate at 1.00% – 1.25%, meaning there is still plenty of room for further cuts if necessary.
There are a few mid-tier data points due to be released today, including jobless claims and US factory orders. However, investors will also be looking ahead to US non-farm payroll figure due tomorrow. After a solid private payroll’s reading yesterday and an encouraging ISM non-manufacturing report there is a good chance that the numbers could be strong. However, there is also a chance that the end of the month saw a slowdown in job creation owing to coronavirus. This could unnerve investors.