This week will bring data that can shape the fate of all investments for months to come
Most of last week was dominated by the strengthening of the US dollar and, in parallel, the weakness of emerging market assets. The US currency recovered to just below 1.17 against the euro. However, most analysts still expect the dollar to remain weaker in the short term due to divergent economic and monetary policy paths.
The European Central Bank (ECB) is not expected to cut interest rates significantly further, as inflation has reached the central bank's target, while the Fed restarted its easing cycle in September, and the only question is how much it will cut this year. Meanwhile, the US economy is slowing, albeit not dramatically, while we are expecting a slight upturn in the eurozone.
These developments point largely towards a further weakening of the dollar.
Last week, the forint also suffered from the strengthening of the dollar. It was already apparent in the first half of the week that the Hungarian currency had no further significant momentum below the 390 level, and when the US currency began to appreciate, the Hungarian currency was quickly pushed back above 390. In the short term, this key level is expected to continue to determine the forint market in the coming days. The main question will be whether the exchange rate can break through significantly or whether we have seen the bottom.
There will be no interest rate decisions in the market in the coming days, but data will be released that could determine decisions in the coming period. In other words, it will be interesting to see what figures are released and how central bankers might comment on them.
Monday will be quiet, with no significant macroeconomic data to watch for at home, while in the euro area, the latest consumer and business confidence surveys will be published.
On Tuesday, life will also start up again in the Hungarian economy, with the Hungarian Central Statistical Office (KSH) publishing the latest statistics on foreign trade and industrial producer prices, which, however, are not expected to cause any serious market reaction. In China, an important September economic index will be released at dawn, and it will also be worth keeping an eye on German retail data. The French and Germans will also release preliminary inflation data for September, which could move the euro-dollar exchange rate.
On Wednesday morning, the government sector balance and the latest second-quarter financial accounts data will be released, which will give us an idea of the current state of the budget and its prospects. Investors are currently paying close attention to related news ahead of the 2026 parliamentary elections. The market and credit rating agencies would clearly view any information related to future election spending negatively. It may also be worth paying attention to September inflation in the euro area, as it could influence the ECB's future decisions, but perhaps even more important will be the US ADP index, which will be released in the early afternoon and indicates changes in private sector employment. In recent weeks, serious questions have been raised about overseas labor market data, and this weakness was partly responsible for the Fed's interest rate cut in September.
On Thursday, investors can also keep an eye on US data, with weekly unemployment statistics and factory order figures due to be released.
However, the really important data will come on Friday, when the comprehensive US labor market report could move exchange rates. The statistics could influence the Fed's decisions in the coming months and how many interest rate cuts there will be this year. In addition, the ISM purchasing managers' index will also be released, so Friday afternoon is likely to be a busy one on the markets.
Cover photo (for illustration purposes only): Getty Images
