The Hungarian Forint continues to nosedive versus the US Dollar on Thursday, extending losses for a fourth straight session. The forint reached a record low versus the greenback on Wednesday of 338.2, before closing the session 1.4% weaker at 332.02.
At 09:30 UTC, USD/HUF is trading +0.1% at 332.20, mid-way through its daily range of 328.34 – 333.37.
Risk Off & Political Developments Hit Forint
The Forint has weakened at an astounding rate versus the US Dollar over the past few weeks. This week alone the Forint has already depreciated by 3.7% and across March the Forint lost 6.7% of its value as a state of emergency was introduced.
These losses are not necessarily owing to the poor health of the Hungarian economy. The moves are more linked to risk sentiment. When risk sentiment drops, investors move out of riskier assets, investments or currencies in preference of safer havens, such as the US Dollar, the world’s reserve currency. As the coronavirus outbreak unleashed havoc across the world, causing economies to grind to a halt, risk sentiment has fallen sharply.
In addition to risk aversion, there is also a strong possibility that the political situation in Hungary is unnerving foreign investors. Distrust over the Hungarian government’s emergency law and markets’ growing concerns over the governments enhanced mandate have also boosted flows out of the Forint.
There is no data due from Hungary today. Tomorrow sees the release of retail sales data. However, the figures are from February, prior to the coronavirus outbreak escalated in Europe, so could be discounted as being out of date.
US Jobless Claims To Soar
As the number of coronavirus cases in America reaches 216,000 investors are turning their attention to the impact that the virus is having on the US economy. US initial jobless claims data will be in focus.
Analysts are expecting another record-breaking number of unemployment claims, up from the eye watering 3.3 million last week. Forecasts are for 3.5 million. This would put unemployment claims for the past two weeks at 6.5 million. As the US shuts down, state by state these figures could get worse before they get better.
A high number of claims would normally pull the dollar lower. However, in the current environment it could hit risk sentiment and actually push the dollar higher.
