Hungary forint nears annual low

Following the European Central Bank's rate decision and policy messages last week, the EUR/USD exchange rate has been essentially stuck as investors wait for tonight's announcement by the U.S. Federal Reserve. The markets see a 78% probability that the Fed will cut its rate benchmark by 25bp and 22% that is will cut 50bp at once. Should the Fed act more hawkish than expected, the dollar could jump to a two-year peak against the euro after bypassing the threshold at 1.11.

The Fed's decision will more than likely also move currencies in the CEE region as dovish messages could weaken the dollar and thus prop up currencies in the region. The Hungarian forint, which is near a 11-month low against the euro at 327.5 and close to a two-year low against the dollar at 293.5, could certainly use this break.

Looking at the past month, the forint lost about 1.2% against the euro, which fits into the regional average.

• Tags:
• USD,
• Fed,
• exchange rate,
• rate cut,
• huf,
• euró,
• dollár,
• forint