The Hungarian Forint is extending its losses versus the US Dollar for a third straight session on Tuesday.
At 09:30 UTC, USD/HUF was trading 0.5% higher at 326.13. This is at the upper end of the daily range 323.97 – 326.83, as investors digest a mixed mood in the market.
Hungarian Forint Slips As Sentiment Dips
The broad mood in the market was mixed on Tuesday. On the one hand, Chinese factory data overnight gave a glimmer of hope that the world’s second largest economy was rebounding after the coronavirus outbreak which paralysed it just six weeks ago. Also boosting broader risk sentiment were comments from the World Health Organisation, that the coronavirus outbreak in Europe could be peaking. The number of new cases in Italy increased at the smallest rate in two weeks.
However, European countries are also considering extending lock down arrangements with Italy considering pushing out the public restriction until May. The coronavirus numbers coming from the US are also unnerving the markets as the death toll breached 3000.
When risk sentiment dips investors often sell out of riskier perceived currencies such as the Forint and buy into safer havens, such as the US Dollar.
Today Hungarian wage data from January showed that wages jumped 9.1% year on year in January, down from the 13.1% increase in December and below expectation of 12.8%. The producer price index, which measures inflation at wholesale level was stronger than forecast at 3.8%.
However, these data prints were from January and February respectively and so don’t include the impact from coronavirus. As a result, investors shrugged off the readings.
US Consumer Confidence In Focus
The US Dollar is extending its gradual recovery, gaining ground versus its major peers. Investors will turn their attention towards US consumer confidence data later today and the virus effect on consumer attitudes and spending.
Michigan sentiment plunged 11.9 points in March to its lowest level since October 2019. Analysts are expecting a similarly large decline in the Conference Board Consumer Confidence Index, to 110 in March from 130.7. Low household morale often results in lower consumer spending, which is bad news for the US economy, particularly given its dependence on consumers.
