The US dollar is higher against the Hungarian forint on Monday morning, adding to two daily gains last week that saw the exchange rate close above 300. US stock and bond markets are closed for Martin Luther King Jr. Day so Forex market volumes are likely to lower than usual.
USD/HUF was higher by 66 pips (+0.22%) to 303.57 as of 10am GMT, with the currency pair making a fresh high for 2019, meaning a new 2019 low for the forint.
Last week, after a 3-day winning streak, fortunes swiftly changed for the forint and two days of losses carried the currency back to its lowest levels since December. Better economic data in the US trumped well-received data and commentary out of Hungary. The forint had started last week on the front foot following inflation data for December that topped expectations and commentary from its central bank that it expected surplus liquidity levels in the economy to come down.
Consensus forecasts compiled by Reuters suggest Central and Eastern European (CEE) currencies could turn lower this year as economies in the region slow. That could mean the forint is headed for fresh record lows and the Czech crown might reverse a strong run at the start of 2020. The future performance of the currency may rest on the introduction of fiscal stimulus in Hungary. Prime Minister Viktor Orban has already flagged a new stimulus package could be introduced as soon as this month.
The dollar’s performance in 2020 has been patchy, but one area of outperformance has been against the forint. With market liquidity expected to be sparse on the MLK holiday and no US economic data being released, trading volumes in the dollar should be well beneath normal daily levels.
The dollar benefited against the forint last week from some well-received economic reports in the United States. Manufacturing survey data from the East Coast gave indications last year’s industrial contraction could be coming to an end. US retail sales for December, including key holiday sales were reported as higher than expected and CPI again exceeded the Federal Reserve’s target of 2% inflation.