Monetary Policy Council Meetings Should Spark Some Market Excitement – But Not This Time. South Koreans Slept Through Martial Law. EUR/USD Continues Its Battle for $1.05.
No Surprises from MPC’s Final 2024 Meeting
During the final Monetary Policy Council (MPC) meeting of 2024, the council decided to maintain the current monetary policy parameters. The decision was so aligned with market expectations that it couldn’t have been more predictable. Probably no one (except perhaps one member of the MPC) expected any changes. Even tomorrow’s appearance by Governor Glapiński is not generating much interest. A meeting, an exchange of Christmas wishes, and that’s it. See you in March. Analysts predict that the March meeting, where the next central bank forecasts will be revealed, will kick off the rate-cutting cycle. Observers are increasingly convinced that this cycle will begin with a double cut, showcasing a certain logical paradox. On one hand, inflation remains robust enough to prevent action for the next quarter, but just three months later, it will no longer pose a problem, enabling bold measures.
Snooze and Lose
There have been instances of people sleeping through major historical events, like the introduction of martial law. Yesterday, South Koreans took it a step further, with many likely sleeping through the entire martial law period. Introduced late at night, it was lifted shortly after 4 a.m. The president made the decision out of fear of Northern influence over the parliamentary opposition. However, the opposition did not share the president’s concerns and, in a vote the military tried to prevent, called for President Yoon Suk-yeol to revoke his decree, which he eventually did. This made it one of the shortest periods of martial law in history. Naturally, the local currency reacted, experiencing a noticeable, albeit not drastic, depreciation on global markets. By morning, however, it had recovered most of its losses. Similarly, the local stock exchange bore the brunt of the overnight chaos in early trading.
The Battle Continues
For two weeks now, a fierce battle has been raging on the world’s main currency pair over the $1.05 level. Today marks another round, with the dollar taking the offensive, pushing the exchange rate below this threshold. This is surprising given that the ADP report came in weaker than expected at 146k, with the previous reading also revised downward. However, Friday’s Labor Department report is still in play, with markets anticipating a significant rebound. It’s worth noting that the previous result was heavily distorted by weather disruptions and strikes at Boeing.
Typically, the złoty weakens as the dollar strengthens, but today it is capitalizing on the euro’s weakness, pushing the EUR/PLN exchange rate close to 4.28 PLN. Meanwhile, the USD/PLN rate remains relatively stable, holding at yesterday’s closing level. Currently, the dollar costs 4.085 PLN.
Author: Krzysztof Adamczak, Currency Analyst at Walutomat.pl
Source: https://managerplus.pl/rpp-czeka-na-marzec-59455
