The US dollar has drifted a bit lower on Friday against the Hungarian forint, despite the fact that the CPI numbers came out hotter than expected.
USD/HUF
The U.S. dollar has fallen against the Hungarian forint during the trading session on Friday as we continue to hang around the crucial 50-day EMA. The 50-day EMA has been flat for a while, and it is probably worth noting that the U.S. dollar has been trading right around 315 HUF for some time, flipping on both sides of the fence but consolidating quite tightly.
The biggest catalyst of the day was U.S. CPI, with core CPI month-over-month coming out at 0.3%. The U.S. dollar initially looked stronger during the day, but it has rolled over. We now have the Fed rate hike next week sharply higher as far as probability is concerned, and with this, it is worth noting that the U.S. dollar is somewhat supported. That being said, the U.S. dollar reaction during the session is a little bit surprisingly constrained.
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The oil retreating sharply has put a little bit more risk appetite into the market
The oil retreating sharply has put a little bit more risk appetite into the market, allowing traders to go out and look for currencies such as the Hungarian forint. U.S. interest rates dropping after the CPI reading is a bit of a bearish factor as well.
Ultimately, there is a market attitude at the moment where traders are not entirely convinced as to how they should behave. There is nothing of particular interest in economic terms as far as Hungary is concerned, but there are a lot of questions to ask about risk appetite, and that is probably where this comes back into play, as this pair is a play on emerging markets in Eastern Europe.
If yields in the United States break through 5% on the 10-year yield and the U.S. dollar breaks 315.85, the fundamental and technical signals in this pair will finally line up to show signs of strength. If we were to break down below the 310.35 level, it could open up a move down to the 308 level, but as things stand right now, that is a little bit difficult to imagine.
Currently, we are just hovering around and treading water right around 315 HUF. That being said, it is worth noting that the Hungarian forint does have roughly 2% as far as interest rates favoring it, but concerns about energy in Europe and, by extension, Hungary continue to keep this somewhat tight.
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