BUDAPEST: Hungary's forint eased early on Friday after industrial output growth slowed sharply in October, fuelling some expectations that the central bank may resume interest rate cuts next year.
Hungary's output rose by an annual 1.7 percent in October based on preliminary unadjusted data, below a 6.1 percent forecast and slowing from 7.6 percent rise in September, as vehicle industry output -- a key driver of the export-driven economy -- lost momentum.
"Some players may think that a weaker economic performance could trigger rate cuts if the mood in international markets allows (next year)," said Akos Kuti at brokerage Equilor.
"This weak output figure suggests that Q4 GDP could also turn out to be weaker, which again could fuel similar thinking among investors."
Hungary's central bank has said it would keep rates at a record low 2.1 percent throughout next year.
At 0810 GMT the forint was flat, trading at 307 to the euro, but by 0835 GMT it eased to 307.28.
Other currencies were steady in early trade.
Some analysts said the region's markets remained supported by the expectation that the European Central Bank could embark on further easing next year to boost the ailing euro zone economy.
ECB President Mario Draghi said on Thursday the level of technical preparation for further measures, widely believed to include quantitative easing (QE), had been stepped up.
"Markets continue to bet that the ECB will have to deliver more QE, especially in terms of outright government bond purchases," said analysts at Raiffeisen, adding that this move could boost central eastern Europe's debt markets.
The region's debt markets have performed strongly this year, with yields dropping to new lows on continued inflows of capital into its high-yielding bonds and monetary easing across the region.
Later on Friday investors will be closely watching an employment report in the United States due at 1330 GMT which could give clues about the expected monetary tightening by the Federal Reserve next year.
Non-farm payrolls probably increased by 230,000 jobs last month after rising by 214,000 in October, according to a Reuters survey of economists.
"Based on the figures released in the past days the data could show a steadily improving employment situation so it could underpin expectations that the Fed will start normalising monetary conditions next year, but the timing is still uncertain," CIB Bank analysts said in a daily note.
Comments
Comments are closed for this article.