Forint up on interbank market
The forint was trading at 307.45 to the euro late Friday on the interbank forex market, up from final quotes at 308.73 on Thursday. At 308.82 to the euro early Friday, the forint moved between 307.34 and 309.41, after an eight-day high at 306.86 late Thursday, and a two-week low at 312.66 Monday morning.
The forint is up 1.40% versus the euro from final quotes last Friday, after losing 0.83% over the week before. It is up 3.01% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.
The Hungarian currency left behind the low-yielding euro while both extended gains against the dollar which fell after an initial lack of decisive new direction numbers on the US economy prompted traders to take profit on its rise since the Fedʼs Wednesday statement.
Later, the dollarʼs dive accelerated as the US governmentʼs second-quarter index on employment cost rose less than forecast and the smallest in 33 years, paring bets the Fed may raise interest rates already in September.
Analysts and Fed experts have now been pondering for years that improving labour market data might not necessarily free the Fedʼs hand to raise rates as it customarily had for decades before the latest global crisis, because this time round expanding employment does not generate inflation, due to much lower pay rises than usual in earlier economic upturns.
The forint rose slightly versus the euro for a sixth consecutive day, and its fortune against the dollar turned after two days of falls.
Both the Polish zloty and the forint could struggle next week, UniCredit said in a note on Friday. Expectation of a slight deterioration of the regionʼs PMIs given weaker euro-area PMIs, renewed focus on Polish politics as president-elect Andrzej Duda assumes office, and the Hungarian
central bankʼs first-ever 10-year interest rate swap (IRS) auction could come in play, UniCredit said. It also cited the last of a batch of eurozone government bond redemptions after which demand-supply turns a bit weaker.
Societe Generale said it was anticipating intensifying pressure on long-dated bonds in Hungary in view of the nearing Fed interest rate increase. It added its forint forward-start payer recommendation performed well this past week amid an upside move in forint swap rates across the curve. It continues to target an upside move in the forint 5-year/5-year interest rate swap rate towards 5.18% amid Fed fears, lack of local demand for long-dated products, and accelerating inflation pressures.
The forint traded at 278.35 to the dollar, up from 282.38 in final quotes on Thursday. On Friday, it moved between 277.26, a nearly three-week high, and 283.19, after a four-day low at 283.83 Thursday intraday, and a two-week high at 277.68 late Monday.
It was quoted at 289.51 to the Swiss franc, up from 291.50 late Thursday. Its range on Friday was 289.28 to 293.51, a five-day low in the morning, after a three-month high at 288.29 Thursday intraday. 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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