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Forint gains on U.S. payrolls

Analysis

The forint was trading at 299.03 to the euro late Friday on the interbank forex market, up from 299.99 late Thursday. At 299.94 to the euro early Friday, the forint moved between 298.54 and 300.47 after a four-day low at 301.08 Thursday intraday. It is up 0.39% versus the euro from final trades last Friday after a gain of 1.03% over the previous week. It is up 5.89% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

Supported by a falling dollar, the Hungarian currency gained a little against the euro, too, in scarce Good Friday trade. 

The dollar nosedived on Friday after a significantly weaker-than-expected U.S. jobs report that should increase speculation over whether the Fed holds off tightening monetary policy for longer than expected.

U.S. employers added the fewest jobs in more than a year in March amid signs the economy has been hurt by the dollarʼs previoU.S. climb to multi-year highs. 

U.S. Treasuries rallied and yields tumbled following the figures, so risk premium on junk rated Hungarian sovereigns with yields also thinning relatively rose, supporting the forint.

Against this backdrop, continuing talk about the National Bank of Hungaryʼs (MNB) growing easing bias apparently does not do any harm, as disappearing first-rate sovereign yields in Europe on the ECBʼs QE that started early March and the likelihood of a rate hike postponement in the U.S. make room for the MNB to manoeuver, widening the upside risk to economic output and exports that should also help the forint through a strong current account surplU.S..

In the latest of a series of official hints at loose central bank policy, MNB deputy governor Adam Balog said in an interview with Reuters published on Friday that he believed the disinflationary risks and the forintʼs recent firming pointed "in the direction of a longer, rather than shorter easing cycle."

The forint traded at 272.17 to the dollar, up from 275.64 late Thursday. On Friday, it moved between 271.09, the best since Thursday last week when it hit a one-month high at 270.52, and 276.41.

It was quoted at 286.33 to the Swiss franc, up from 287.29 late Thursday. Its range on Friday was 285.45 to 288.26. 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.

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