The dollar maintains its good run. The flow of capital across the ocean is so huge that it is causing an exodus from our part of the world. This weakness is seen not only in the case of the Polish zloty, but also the forint, for which maintaining interest rates at an unchanged level provided no help.
Retail Sales indeed poor
Yesterday we got the retail sales data. It fell by 2.2% year on year. Analysts had expected an increase of 3.2%. This is therefore a very negative surprise. These data hit the market at a very inconvenient time for the zloty. Since the beginning of last week, like other currencies in our region, the Polish currency has been in retreat. The reason for this is the great strength of the dollar. That is probably why we are seeing a continuation of this move this morning, with the euro rate at its highest since June.
Unexpected strength of the dollar
Recent times have been very favorable for the dollar. In just under two weeks, it has strengthened against the euro by more than 1.5 cents. Since late September, we have seen an increase of 4 cents, which is a considerable change for this currency pair. The US currency is being helped not only by macroeconomic data but also by anticipated cuts in interest rates falling further away. Such a strong move has to run out of steam sometime, though. The question arises whether the end will come before the US elections, where judging by the bookmakers’ odds, things are currently tilting in favor of the Republicans. If this trend were to continue, it would probably be another good reading for the dollar because it would eliminate a major element of uncertainty.
Hungarians paused rate cut cycle
The rate of interest rate cuts is slowing down again in Hungary. After ten consecutive reductions in August, we had the first maintenance of interest rates at an unchanged level this year. Currently, after a symbolic cut of 0.25% in September, we are again pausing on the cuts. This rate now stands at 6.5%, the same as in Romania. These are the only two countries in the European Union that have higher interest rates than Poland. Interestingly, inflation in Hungary is an even 3%, which theoretically leaves a lot of room for further rate cuts. Some analysts suggest that the decision may have been motivated by an attempt to defend the forint, which has recently had a very weak run against the euro. It would be a strange move but not the first of its kind by a central bank in our region recently.
The macroeconomic data schedule is worth keeping an eye on:
15:45 – Canada – decision on interest rates.
Maciej Przygórzewski – chief analyst at InternetowyKantor.pl
Source: https://ceo.com.pl/dolar-sie-nie-zatrzymuje-wegrzy-wstrzymali-cykl-obnizek-stop-procentowych-95082
