The Hungarian Forint is extending losses versus the US Dollar for a third straight session. Dire Hungarian manufacturing figures, combined with global risk off sentiment has sent the forint tumbling lower.
At 09:30 USD/HUF is trading +1.8% higher as 333.00. This is the top end of the daily trading range of 326.40 – 333.22. The Forint is trading 1% off its record low of 336.4 hit last week.
Hungarian Manufacturing PMI Dives To 29.1
The Forint is falling back towards its record low after data showed that the activity in the manufacturing sector dropped to a lower level than that experienced in the Financial Crisis of 2008/9. The data shows the initial impact of the coronavirus outbreak on the manufacturing sector.
The Hungarian manufacturing purchasing managers index PMI dropped to 29.1 in March. This was down from 50.1 the previous month and well short of expectations of 47. The figure 50 separates expansion from contraction.
To put the figure into perspective, the manufacturing PMI dropped to around 40 in the financial crisis of 2008/9. Today, however, Hungary is much more integrated into the global economy and global supply chains meaning it is now more vulnerable to global crisis.
The broader risk off mood in the market was also weighing on the perceived riskier Forint. Data showed that Chinese manufacturing activity expanded in March, rebounding after the coronavirus lock down saw factories across China close.
However, this was overshadowed by weak manufacturing data from the rest of the region. Japan and South Korea saw manufacturing plummet. With demand from Europe and US set to remain soft amid the ongoing lock down, fears are growing over the likelihood of a global rebound.
US Dollar Rallies On Safe Haven Flows
The Dollar is bounding higher as investors seek out its safe haven properties. Last night President Trump warned that between 110,000 – 240,000 Americans could lose their lives to coronavirus. These gut-wrenching figures sent a chill through the financial markets. US stock markets are pointing to a lower start as investors move out of riskier assets.
Attention will now turn towards US data. US manufacturing PMI is expected to show a contraction in the sector. The US ADP private payroll report will also be closely watched ahead of Friday’s non-farm payrolls. Investors are expecting a decline of -150,000 jobs as coronavirus outbreak impacts the US economy.
