USD/HUF: Hungarian Forint Drops On Weaker Inflation, Trump Economic Relief

The Hungarian Forint is moving lower versus the US dollar for the second straight session on Tuesday. The Hungarian Forint closed 0.07% lower versus the greenback on Monday and is down an additional 0.7% on Tuesday as the dollar dominates trading.

At 09:15 UTC USD/HUF is trading -0.7% at 295.85.

Dollar Dominate As Trump Floats Economic Relief

The dollar is on the rebound on Tuesday after falling versus its major peers in the previous session. The US dollar came under pressure as fear gripped the US financial markets dragging US equities, bond yields and the US dollar lower.

The US dollar is finding its feet again in early trade on Tuesday thanks to recovering risk sentiment and expected economic relief from Washington. US President Trump announced that he will ask Congress for emergency economic relief for workers amid the coronavirus outbreak. The prospect of support from Washington has lifted spirits in early trade.

Additionally, the fact that China is seeing the number of new cases decline is reminding investors that this is a short-term problem. In China there were just 43 new cases, the same as in the UK. This is well below the 3000 new cases that China was experiencing at the peak of the outbreak.

There is no high impacting US data due for release today. Instead investors will remain glued to coronavirus news in addition to any updates on the oil price war between Saudi Arabia and Russia. Oil is on the rise, up 3.5% in early trade after declining 25% at the start of the week. Weaker oil prices will keep inflation low.

Hungarian Forint Under Pressure On Falling Inflation

The Hungarian Forint is trading on the back foot on Tuesday after data revealed that inflation in the country was falling. Hungarian inflation dropped to 4.4% year on year in February, down from 4.7% in January. The reading also fell short of analyst’s’ expectations. On a monthly basis inflation increased just 0.3%, well short of January’s 0.9% increase.

The data will be a relief for the dovish Hungarian central bank. Last month the National Bank of Hungary flagged possible tightening at its next meeting on 24^th March to rein in accelerating inflation. However, since then times have changed and central banks across the lobe have turned significantly mote dovish. The pressure is off the NBH to adopt a more hawkish stance.

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