The main currency pair returns to declines after yesterday’s attack on resistance at the 1.06 level. The national currency is once again on the defensive, on the one hand a stronger USD, on the other hand, lower core inflation, which theoretically paves the way for interest rate cuts in the near future. Gold regains its lustre, aiming for 3k USD per ounce.
Euro Problems
The start of this week is a good proof of how difficult it is for the common currency to initiate a major correction in the markets. The rate first shot up around the resistance at the level of 1.06, only to give back almost all profits today and return to around 1.0530. However, it is difficult for a major correction when we see the chance of a rate cut in the US at the December meeting falling. It is already below 60%, a poor result for Fed decisions, to count on such a scenario. Especially since American decision-makers wait to see what the newly elected president will do. Looking at his moves when filling positions, we see that the main goal Donald Trump will have is the return to tariffs. Today, we also learnt about the CPI inflation reading from the eurozone. The October result at 2% does not take away the ECB’s arguments for a rate cut at the next meeting.
Price Hostage
The morning drop in EUR/USD negatively impacted the złoty’s quotations. PLN in relation to EUR or USD again climbed to higher levels, respectively over 4.33 and 4.10. The next few hours brought slight drops, however, a stronger USD will again lead to a capital outflow from emerging markets. Some analysts also point to the lower core inflation (4.1%) in our country, which theoretically allows for the possibility of interest rate cuts. Especially since there has also been a voice from the Monetary Policy Council itself, saying that discussions regarding monetary expansion could begin in March. At the moment, however, it is difficult to indicate that this fact determines the fate of PLN. Especially considering that Trump’s new ideas may overturn the current situation and cause, for example, higher inflation. Which would lead central banks to halt easing, which in case of Poland will mean the entire 2025 without rate cuts. Currently, the main factor determining PLN quotations will be the world’s primary currency pair behaviour. Any move upwards will benefit the Polish currency.
3k USD per ounce?
There is a lot going on with gold quotations in recent days. After the Trump’s election as president of the USA, along with the strengthening of the USD and increasing yields on US bonds, we witnessed a significant correction in quotations. When the situation calmed down, gold once again counterattacked and since the end of last week it has gained over 3%. We need to also mention the geopolitical factor, which may again initiate demand for this commodity. We are talking about the USA consent to Ukraine’s attacks on targets in Russia. Undoubtedly, this factor could potentially escalate tensions and invoke a Russian response. It is likely therefore that the weakness of gold was only temporary and now we will see a move to new ATHs and thus an attack at the 3k USD level per ounce, which analysts are already discussing.
Author: Krzysztof Pawlak, Currency Analyst for Walutomat.pl
Source: https://managerplus.pl/zloto-znow-swieci-pelnym-blaskiem-16545
