The Hungarian Forint (HUF) is pushing higher versus the US Dollar (USD) in early trade on Friday. Improved risk sentiment is boosting the Forint after a wild few day in the global financial markets.
At 09:20 UTC, USD/HUF is trading -0.15% at 301.90, snapping a three-day winning streak. The pair closed Thursday 1.1% higher after briefly touching 307.63, a 10-day high.
Hungarian Forint Rebounds
Risk sentiment is cautiously rebounding on Friday after a roller coaster week for financial markets amid escalating coronavirus fears.
The Forint had been under pressure over the past few sessions after the government announced a state of emergency on Wednesday, in order to slow the spread of coronavirus in Hungary. These measures included boarder controls and the closure of universities, theatres and cinemas. Whilst the measure are designed to slow the spread of coronavirus, they will also decrease economic activity. The prospect of weaker economic growth weighed on the Hungarian Forint.
Today, the broader market is in a better place, amid growing optimism of further stimulus from the Fed and potentially the US government. Improved sentiment is helping the lift the demand of perceived riskier currencies such as the Hungarian Forint.
More Fed Action Expected
As financial markets reeled in the previous session on coronavirus fears, investors brought into the US dollar for its safe haven properties. The US Dollar jumped across the board.
The Federal Reserve of New York announced a liquidity injection to the tune of $1.5 trillion. This has not only helped prop up the market, but it has also boosted expectations that the Federal Reserve will start a quantitative easing programme when they meet next week. There are also growing expectations that the Fed will cut interest rates back by 100 basis points next week, rather than a 50 basis point cut in March, followed by another in April.
Investors are also growing hopeful that the US Democrats and Republicans will approve a fiscal stimulus programme. Up until now the response from the White House has been slow as bureaucracy hasn’t allowed the US Government to move as quickly as the coronavirus outbreak needed or as fast as the markets desired.
