Despite starting the week with a sharp bearish gap, the main currency pair managed to climb above last Friday’s closing level. The Polish złoty took full advantage of the dollar’s weakness. Meanwhile, NBP President Glapiński has not changed his stance.
A Rollercoaster Ride
The markets continue to experience the “Trump effect,” leading to significantly increased volatility across all asset classes. The EUR/USD pair opened Monday’s session around $1.024, a surprising development given that the previous week had closed more than a cent higher.
Despite this initial hit, the dollar remained under pressure throughout the week, consistently losing value. By Wednesday, EUR/USD had climbed to $1.045, where resistance finally kicked in. Currently, the pair is consolidating just below $1.04. Despite the recent upward movement, the overall sentiment remains bearish.
The złoty has taken full advantage of the dollar’s weakness. As expected, the USD/PLN exchange rate has been on a sharp decline this week, dropping to 4.03 PLN. The situation is even more interesting against the euro, where the PLN/EUR exchange rate has fallen to 4.185 PLN, reaching its lowest level in seven years.
No Change in Stance or Interest Rates
On a local level, monetary policy remains the key factor strengthening the Polish złoty. On Thursday, NBP President Adam Glapiński reiterated his stance on interest rates. While some analysts are searching for a more dovish tone, his message was largely unchanged:
Given the current conditions and available forecasts, he does not see any room for interest rate adjustments at this time.
One surprising aspect of his press conference was that economic forecasts were only presented up to 2025, whereas previous reports typically covered a period of more than two years. This selective use of arguments reinforces the notion that interest rate cuts should not be expected anytime soon.
For the Polish złoty, this means that the interest rate differential between Poland, the Eurozone, and even the U.S. will continue to widen. This divergence should further support the złoty’s appreciation in the near future.
The Labor Market Demands Attention
Lately, U.S. President Donald Trump has dominated market sentiment. Regardless of one’s opinion on his policies, it is clear that by stirring controversy at every turn, he is making global finance even more dollar-centric.
Under these circumstances, even key U.S. labor market reports have struggled to grab attention. The incoming data this week has been mixed:
- The Challenger report indicated a rise in announced layoffs.
- The number of unemployment benefit claims has increased.
- On the other hand, the ADP report on Wednesday showed a rise in employment.
As a result, today’s Non-Farm Payrolls (NFP) report (which was not yet available at the time of writing) could shake up the markets once again. Analysts remain pessimistic, forecasting weaker job numbers compared to last month.
Author: Krzysztof Adamczak, Currency Analyst at Walutomat.pl
Source: Manager Plus
