There are already unambiguous reactions on the markets to the Friday downgrade of the United States by Standard & Poor’s. The US dollar is being hit versus every key currency, the Swiss franc is strengthening - versus the forint as well to the dismay of Hungarian FX debtors. The HUF reached a new record to the CHF at 255 on Monday morning, but then it corrected back to around 250. Later on, as global sentiment turned sour again, the forint began to depreciate markedly again.
S&P said Friday night that it had downgraded the U.S. credit rating one notch — from AAA to AA+ — because “political brinkmanship" had made the government’s ability to manage its finances “less stable, less effective and less predictable."
The other two main rating agencies, Moody’s and Fitch have not followed suit.
The US has enjoyed an AAA rating from S&P since 1917.
Last week, Moody’s reaffirmed the US triple-A rating but adopted a negative outlook. Fitch has not formally reaffirmed its AAA rating, and is expected to announce the outcome of its rating review late August or early September.
EUR/HUF north of 275 again. New record in CHF/HUF within reach - 12:34
The forint has once again breached north of 275, a key level both from a technical and psychological point of view, shortly after noon on the interbank market. The HUF was quoted at 275.80 to the EUR, while CHF/HUF approached 255 again, so the Hungarian currency stands only inches away from a new all-time low. Versus the USD the forint was quoted at around 193.50.
Forint firming fizzles out - 11:03
The sharp forint appreciation and the improvement in stock market sentiment in the morning have reversed, which led the HUF back to around 275 versus the euro and to 252.50 against the Swiss franc. The forint is currently quoted at around 191.50 to the USD on the interbank market.
Forint clearly firming - 09:16
After opening at 09:00 CET the main European stock market indices moved toward strengthening, and the improving sentiment seems to be beneficial for FX markets as well; the CHF and the JPY are easing, while the euro is appreciating on European Central Bank President Jean-Claude Trichet signalling the ECB is ready to start buying Italian and Spanish debt. EUR/CHF rose to 1.09 by 09:00 from around 1.08 at 08:00 and this helped a lot in moving CHF/HUF to 250.50/251.00 from around 253. In the early morning session the cross was transitionally above 255, a new all-time low for the forint. The HUF has firmed also vs. teh EUR, to around 274 from 275 and strengthened to around 190 from 191.50 against the USD.
A small correction - 08:34
The forint corrected back some to 253 versus the Swiss franc and to 273 against the EUR. There is volatility but no panic, fortunately.
Forint started to ease - 08:06
Another wave of risk aversion reached the forint market, as well. The HUF is already above 275 to the euro - the 275.37 EUR/HUF level has not been touched since late January 2011.
CHF steps on it - 07:59
At 8 A.M. CET the Swiss franc reached a new all-time high, going north of 255 versus the forint.
Global FX markets - Calm before the storm? - 07:47
Trading has turned smoother in EUR/USD, but we wouldn’t draw any conclusion from the fluctuations in the exchange rate between the two currencies, with both ‘parent’ economies being in bad shape.
The USD has lost strength primarily versus the Japanese yen and the Swiss franc so far, which indicates that if not of dramatic proportions but some rechannelling of funds from USD to other safe haven currencies is possible. Initial reactions over the weekend by analysts were that this process will not be strong.
Charting is displayed using TradingView's technology, a platform, where you can build advanced charts,
spot upcoming trends in the stock screener, and find inspiration in multiple trading ideas
