The forint faces further trials and tribulations this week, with many announcements to come

What happened last week?

Although there were no major upsets, the forint took a big hit last week. The most important domestic event was the central bank's 25 basis point rate cut, which was fully in line with market expectations and analyst consensus. The Hungarian currency strengthened on Tuesday, but the momentum only lasted until Wednesday afternoon, when it started to weaken from the 394 level, and was back above 398 on Friday.

EUR/HUF

Source: Portfolio-Teletrader Kft.

Speaking at the background briefing after the interest rate decision, Barnabás Virág, Deputy Governor of the MNB, said that from now on the central bank will have less room to cut interest rates for the rest of the year, which means that in addition to small rate cuts, a pause in the cuts could also be considered. The MNB will switch to a data-driven mode and will make decisions on a meeting-by-meeting basis in the light of incoming data.

In addition, an important, though not at all unexpected or surprising, announcement was made last week by the European Commission that it is proposing to open an excessive deficit procedure against Hungary, alongside five other member states, including France. The decision to open the procedure will be taken by the Council of the European Union in July.

What can we expect this week?

For domestic macro data, we first have our eyes on the MNB on Tuesday, which will publish the household credit data for the fourth quarter, while the Government Debt Management Agency (ÁKK) will hold its usual 3-month discount Treasury bill auction on the same day.

On Wednesday 26 June, the MNB will publish current account data and the consolidated balance sheet of credit institutions for April.

On Thursday, the Hungarian Central Statistical Office (KSH) will publish its May data on vital events. Then on Friday, we will also be watching the KSH in the morning, which will publish its statistics on tourist accommodation turnover, industrial producer prices, employment and unemployment data, all for May.

The international macoeconomy is already in full swing on Monday morning, with Japan's May mechanical orders data first, followed by the Chicago Fed index, the FHFA house price index and the Conference Board's consumer confidence index in the US in the afternoon.

On Wednesday 26 June, new housing starts and sales data for May will be published in the US. On Thursday, China will publish its industrial company performance and profitability report, while the June consumer confidence index for the euro area and the EU will be released in the morning. On the same day, the US will release durable goods orders, final GDP data, and data on permanent and new jobless claims, which will also be closely watched by the Federal Reserve for signs of a cooling economy.

On Friday, unemployment and industrial production data for May in Japan will be released, while Germany will publish its June unemployment report. On the same day, the US will publish PCE inflation and personal income and spending statistics. Later, the Chicago PMI data and the Michigan index will be released.

This time there will be another release on Sunday: the Chinese services and manufacturing PMI for June will be released in the morning.

Cover photo: Getty Images