Currency summary of the week. Polish zloty in the spotlight.

A week ago in the currency summary of the week we focused mainly on global events. In this, however, we will consider their impact on our currency and its potential behavior in the coming days. Markets are slowly recovering after the last dozen or so days of limited quotations, and the new geopolitical environment creates opportunities and threats mainly for exotic currencies weak after 2019. Today, however, we will take to the proverbial workshop, primarily PLN.

Market anomaly

This anomaly relates to the current dollar situation. We treated the recent strengthening on USD as a reaction to tensions in the Middle East. Despite the relaxation and clarification of the situation, the US currency remains one of the strongest in recent times. Perhaps Friday's publications did not manage to disturb the good run on USD. Speaking of "anomalies" to the US currency, I mean the geopolitical situation in which we find ourselves. The greatest uncertainty and market turmoil in the context of events in Iran are already behind us. What's more, US bonds and an increase in their yields do not lead too much to statements suggesting increased demand for the dollar. Investors, however, stick to the vision that the slowdown will not reach the US so quickly. The fuel to be cleared of potential stagnation is the trade agreement to be officially signed on January 15.

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

Good data from the US labor market, I think they will Federal Reserve to maintain the policy of maintaining interest rates at the same level. Due to the current policy and the situation in which the dollar is located, the zloty was losing last week against the US currency. Our zloty seems to be largely resistant to most of the geopolitical turmoil, but the NBP's inflation claims do not foresee any changes in interest rates in the near future. At Friday's session we observed a higher USD supply in relation to the recent, upward quotations of this pair. The USD / PLN exchange rate from 3,8275 dived to the nearest support located around 3,8041. We can expect next week to bring some sideways at this price level. If he maintains it, we can count on a slight reflection.

Carney weakens the pound

During the meeting Central Bank of England, its president Mark Carney talked about uncertain economic growth in the near future. Clearly the pigeons forecast did not impress the pound. Despite BoE's relatively positive forecasts for the coming year, Carney warned of their uncertainty. Moreover, he added that economic growth in Great Britain in his opinion fell below the potential.

Is this an announcement of interest rate cuts? I do not exclude such a scenario. Mark Carney may have suggested this slightly, talking about looking for short-term incentives to boost the economy.

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

Speech by the CEO of BoE effectively weakened the pound in the last week's session. The GBP / PLN exchange rate stayed slightly below 4,9703. This price is the key support that arose after the strong depreciation of the December pound, when he dived from PLN 5,16 per GBP. Recently, the rate consolidated quite strongly between 4,9703 and 5,0050.

Better production is a salvation for the Eurozone?

German industrial production for November, which was published on Friday, January 10, showed an increase of 1,1% MoM. These are positive readings, which in the light of previous months have certainly improved the economic mood. Other publications from the Eurozone, among others from Spain, Italy or France, also looked good in m / m terms, thus recording an increase. You can speculate on this topic assuming that the hardest stage of the slowdown is behind us. The main brake for this should be the fact that there is no factor on the horizon that could revive the economy.

EUR / PLN chart, H1 interval. Source: xNUMX XTB xStation

The euro is currently in depreciation against the zloty. We currently have to pay approx. 4,23 PLN for one EUR. For the time being, nothing indicates that the situation should change drastically. The attention of the EU, and thus their main currency, is focused on Brexit, which, despite leaving at the end of the current month, is not quite so full, on the proverbial last button. Problems arise in the negotiations between the Community and the United Kingdom. In addition, the new head of the European Commission indicated in a recent conversation that it is almost impossible to reach an agreement with Johnson in such a short time. The situation therefore creates room for the appreciation of exotic currencies even against the euro. In the near future, the zloty should also benefit.