As a reassuring euro area final April composite PMI rounded out a rack of recovery-suggesting data lately on euro zone consumer and producer price inflation and bank lending to the private sector, eroding certainty that the ECB will carry out its QE programme in full, first-rated euro zone yields resumed rising, pulling up Hungarian yields, too, and the fast strengthening euro again left the Hungarian currency behind.
Meanwhile, the dollar extended losses after data showed that US non-farm private employment rose less than expected in April, fuelling concern over the strength of the US economy, and restarting bets for the postponement of the Fedʼs rate hike.
Caught again between the rock and a hard place of the euro-dollar cross, the forint was also subdued by the publication of the minutes of the National Bank of Hungaryʼs (NBH) latest rate meeting in April which indicated that the central bank will continue to cut its main interest rate until it reaches its inflation target at around 3%. After months of deflation, at least zero inflation could be attained by October the earliest, analysts say.
A surprise 25 bps policy rate cut in Romania on Wednesday also reminded investors to what was in the offing in Hungary, too.
However, Central European currencies should recover soon from their recent fall if European government bond markets stabilise, a fresh Reuters poll of analysts showed on Wednesday. But Polandʼs zloty and Hungaryʼs forint, the most liquid and volatile units in the European Unionʼs eastern wing, could retreat again later in the year when many analysts expect the US Fed to start hiking its interest rates, Reuters added.
The forint traded at 269.87 to the dollar, up from 271.43 late Tuesday. On Wednesday, it moved between 268.45, a more than two-month high, and 272.05 after a five-day low at 273.76 Tuesday intraday.
It was quoted at 294.83 to the Swiss franc, down from 293.01 late Tuesday. Its range on Wednesday was 291.96 to 295.17, a nearly three-month low. Since its crash to an all-time low at 378.49 on January 15 when the Swiss central bank scrapped its cap of 1.20 to the euro, it reached the highest at 281.07 on February 26.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
