Currency summary of the week. The virus threatens recession.

Last week was definitely bearish. They dominated the market based on the poor condition of the global economy and the growing virus spread. Despite the lack of strong panic, the mood is not the best and in the coming days we should not count on too much. In the overall summary, the indexes are doing quite well, balancing at historical peaks. Is it high time that the demand-driven one overestimated itself significantly? Such a statement would be approached with as much caution as talking about the global recession based on several months of interesting PMI data in Germany or Japan. Clearly, the sale did not bypass the Polish market. In today's currency summary, we'll look at selected currency pairs.

The dollar slows down

Data from the world economy are difficult to assess unequivocally. Publications from Europe are negative in the context of GDP readings. Analysts and forecasters expected slightly better results. On the other hand, data from the east brought a bit of optimism. The industrial PMI for January was pretty good and importantly above market expectations. South Korea is one very good example of a strong rebound in the industry. It is not one of the largest economies in the region, but it is a good barometer of changes in the global economy. A strong slowdown hit her at the very beginning, even before the first suggestions of recession in other countries. Perhaps the data published in December for us suggest at least a slight stabilization in the industry? There is a good chance. Industrial production in December reached as much as 4,2% y / y. We also observed an increase in this indicator in Japan and China.

USD / PLN chart, H4 interval. Source: xNUMX XTB xStation

At the end of the week we observed a slight slowdown and weakness of the dollar. It was largely the result of Federal Reserve statements mainly on inflation policy and plans for the coming months. FED he announced that the current purchase of debt securities will only slow down once he has reached sufficient reserves. What is the assumed ceiling? According to Powell, they are expected to reach $ 1,5 trillion. Of course, it was clear that interest rates remained unchanged.

We are currently observing a slight rebound to the dollar against the zloty. Could this be the first signal suggesting zloty appreciation? We will see this by observing the course's further reaction. It seems that after quite a long period without an adjustment on USD / PLN we should expect a deeper, "test" supply movement.

Pound in appreciation

January 31 Great Britain has officially left the European Union, thus being the first country to do so. During the Thursday session, investors, despite a large number of macroeconomic readings, awaited the decision Bank of England on interest rates. The bank decided to leave them unchanged. The GBP / USD exchange rate gained, recovering from morning drops. The pound gained practically against most currencies. The weakening of the euro against GBP was clearly visible.

GBP / USD chart, H1 interval. Source: xNUMX XTB xStation

The pound maintains positive trends towards the dollar. Optimism on GBP / USD is mainly due to the fact that markets are not able to fully value all the proverbial "buts" and the difficulties facing the British economy. A strong pound is a mirror image of the (currently good and stable) economic situation. However, one should not forget that there are still many negotiations ahead of the EU and the UK in the context of trade negotiations. According to the chairwoman of the EU commission, the Community and Boris Johnson face the challenge of long and hard talks. Of course, none of the parties intends to let go and give themselves the proverbial saying "push" economically negative provisions.

Asia sets the rhythm

Asian countries are currently in a dull position. A strange fate is weighing on China, which throws more and more new logs under its feet. The end of the trade war was to be a light in the tunnel and the beginning of the country's focus on stimulating the economy. Currently, China is a virus outbreak. Boring sessions on the local markets determine bad moods in Europe. The slight rebound of industry at the end of the year cast some optimism on the further situation of Eastern countries. On the other hand, closed factories to prevent the spread of the coronavirus will affect poor PMI readings for February, which are still ahead of us.

CHNComp chart, H4 interval. Source: xNUMX XTB xStation

Already at this point, China, in the assessment of global organizations, is acting effectively and rationally. Authorities delay employees' returns to factories, and stock markets are slowly returning to their former turnover. Of course, there is no doubt that the service sector has also suffered and consumption will be limited in the coming weeks. The current situation is strongly affecting the Chinese index, which is recording further strong declines.