Will the Fed start easing its monetary policy and what awaits the USD? What will the week bring?

The past week on the markets was associated with further increases - these were particularly visible in the case of the WIG20 index, which ended Friday's session almost 3,2% above the mark. Investors are increasingly aggressively betting on interest rate cuts in the United States, and a weaker dollar supports the "everything bull market."

What's next for USD?

The data from the American economy published last week did not shock market participants. The PMI index for manufacturing was as expected, although still below the threshold of 50 points. In turn, ISM showed both a significant increase in orders and some revival in price pressure. However, data from Europe may be a bit surprising. The final readings of the European PMI indices confirm a rebound in industry, which may suggest that interest rates will increase EBC may end painlessly for the Old Continent. Nevertheless, EURUSD is retreating from around 1,10 and on Monday morning it is testing around 1,0850, moving in a wide consolidation zone.

Despite the fact that in terms of seasonality, December is the weakest month for the US dollar, the market seems to be playing out a clear scenario. Inflation in the US will be heading towards the target Fed, which will allow the Reserve to reduce interest rates. This, of course, will have a negative impact on the valuation of USD, which remains relatively expensive in the long term.

Playing against the weakening USD may be extremely attractive in combination with... the New Zealand dollar, which is currently extremely cheap. The Reserve Bank of New Zealand kept interest rates unchanged at its last meeting, and the new RBNZ forecasts turned out to be extremely hawkish.

In today's webinar:

• What do macro data tell us?
• What's next for USD?
• Extremely cheap NZD

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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