The past few days have brought good news for those who enjoy a sweet treat with their coffee. Not only have cocoa and coffee futures dropped due to profit-taking in the commodity markets, but prices are now quoted in a sharply weakening U.S. dollar.
Dollar at Its Weakest Since 2020
Just yesterday, the exchange rate of the U.S. dollar against the Polish zloty fell to its lowest level since 2021—and that milestone didn’t last long. Today, we are seeing levels not reached since 2020, and the dollar is just over one grosz away from breaking that threshold. It’s even possible that by the time this article is published, we’ll be talking about the cheapest dollar since 2017—although those lows are still 15 groszy below the current rate, making a further drop in the next few days unlikely, even considering current U.S. policy.
Why is the dollar falling so sharply? Several reasons converge:
- Geopolitics – Recently, Middle East tensions strengthened the dollar while weakening the zloty. With the situation stabilizing, this pressure has eased.
- Investor confidence – Markets dislike uncertainty, and the current U.S. administration isn’t providing much clarity.
- Rate cut expectations – Investors are increasingly pricing in a faster pace of interest rate cuts by the Federal Reserve.
These factors combined are clearly visible in recent charts and market behavior.
Not Just Good News for the Sweet-Toothed
Contrary to common complaints that the news is always negative, last week saw a major breakthrough on the cocoa market. Just a week ago, cocoa contracts were trading at 10,000 USD; today, they’ve dropped below 9,000 USD. Since the start of the year, prices have fallen by more than 25%.
Coffee lovers, too, have reason to smile. After hitting historic highs in February, coffee futures have entered a downward trend. Prices of both cocoa and coffee are now bittersweet: about 30% below their peaks, which seems positive, yet still historically high. In fact, before 2024, neither commodity had ever come close to the price levels we’re seeing today. So, while prices are falling, they’re still not cheap—and with contracts priced in dollars, and the dollar also falling, the dynamics are complex.
Czech Central Bank Holds Steady
On the monetary policy front, the Czech National Bank (CNB) announced its interest rate decision yesterday. After a cut in May, the CNB kept its benchmark rate unchanged at 3.5%.
While annual inflation rose to 2.4% in May (from 1.8% in April), analysts consider April’s data an anomaly due to a base effect from an inflation spike that month in 2024. In year-over-year terms, April 2025 inflation was therefore comparatively lower.
Market reaction to the rate decision was initially mixed. The Czech koruna dropped sharply right after the announcement, but within minutes rebounded to a stronger position than before the decision.
What to Watch Today – U.S. Data
Key macroeconomic releases scheduled for today include:
- 2:30 PM (CET) – U.S. GDP
- 2:30 PM – U.S. Durable Goods Orders
- 2:30 PM – U.S. Initial Jobless Claims
These releases may have a further impact on currency and commodity markets, particularly if they confirm or challenge expectations around Fed rate cuts.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: ceo.com.pl
