Good luck for our native currency, the dollar is back to PLN 4

The zloty has been having a very good run lately. It is supported by both local and global factors. The effect is the dollar once again at PLN 4 and it will not necessarily be a barrier that will stop our currency.

The Fed has room to cut rates

The dollar already cost less than PLN 4 in July this year, but since then it has gained significantly, largely after the surprising September decision of the Monetary Policy Council to significantly cut prices. interest rates. From the beginning of October However, the USD/PLN pair is falling rapidly, mainly due to the post-election reaction in Poland, but also to events on the global market. In Poland, a week ago I wrote about a new impulse after the Council not only did not change interest rates, but also, through President Glapiński, suggested no changes at least until March. This allowed the EUR/PLN pair to go below 4,40 for the first time since August 2020.

Global factors were also triggered. The market no longer remembers the conflict in the Middle East at all, and slightly better data on October inflation in the US published last week caused euphoria, expressed, among others, a significant discount in the dollar. In these circumstances, the USD/PLN exchange rate dropped significantly. While the reaction may have seemed excessive, the fact is that the inflation outlook in the US (and indeed in the Western world in general) is steadily improving and the Fed will easily have room to cut interest rates next year. Although the head of the Fed is still trying to scare the markets with a possible increase, the valuation clearly communicates at least 4 cuts next year.

Slowdown in China

In this context, what could disturb the positive sentiment for the euro are macroeconomic data. The situation in Western Europe is already difficult at the outset, and in addition there is a delayed impact of the ECB's increases and the slowdown in China, which is a somewhat unexpected phenomenon. Posted this week (Thursday) November PMI data will show how difficult the situation is and to what extent the recent increases EUR / USD (and therefore USD/PLN declines) are justified.

Moreover, this week we will also learn the minutes of the FOMC (Wednesday) and the ECB (Thursday) and the much-awaited report NVIDIA in a sense, it will end the quarterly earnings season in the US (after the session tomorrow). At 9:35 a.m. the euro costs PLN 4,38, the dollar PLN 4,01, the franc PLN 4,53 and the pound PLN 5,01.

Source: Dr. Przemysław Kwiecień CFA, XTB