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Weak Data from the US Pushes Dollar Down

INVESTINGWeak Data from the US Pushes Dollar Down

Weaker data from the United States pushed the American currency down. One euro is now worth more than a dollar and 10 cents. Bottled oil is passing the $80 mark per barrel. Luckily, unemployment continues to stay put.

Data weakens the dollar

Friday’s data did not help the dollar. The American economy was significantly affected by weaker spending. Growth was lower than expected by 0.1%, and this was enough to turn investors away from the dollar despite good data on orders. Looking at recent days, a pretext has been sought for a long time to exceed the level of 1.10 in the main currency pair. These data were, as you can see, sufficient. Not even a very good report from the University of Michigan could stop investors. However, it should be remembered that investors expected a good result. Today, this dollar-weakening move is being continued. Interestingly, this did not affect the złoty. The rate of the Polish currency has remained almost unchanged against the euro for several days.

Next peaks of oil

The barrel of Brent oil has for the first time since early December exceeded the $81 barrier. American WTI oil, on the other hand, reached $76. Among the reasons for the increases, the confusion in the Red Sea, being the only way to the Suez Canal, is of course mentioned. On the other hand, the first of the big companies has already returned to this region, seeing no escalation of actions, which in turn works stabilizing. A big topic is also expectations regarding interest rates. There is a lot of talk on the market about a possible March interest rate cut by the FED. Looking at the quotations of futures contracts for the interest rate, this is a very rational expectation. A month ago, the chance for a cut was about 20%. Today it exceeds 80%. Falling interest rates should stimulate the economy, and consequently increase the demand for oil.

Unemployment rate unchanged

Friday’s data on unemployment in Poland did not surprise analysts. An unemployment rate of 5% was expected, and we received exactly 5%. However, it should be remembered that we are dealing with unemployment, measured by applications for unemployment benefits, and not by people actively looking for work and unable to find it. The latter method, called BAEL (Survey of Economic Activity of the Population), gives lower results. To better illustrate the scope of differences, it is worth pointing out that according to this method at the end of the 3rd quarter, unemployment in Poland was 2.7%.

There are no major macroeconomic data readings in the calendar today.

Maciej Przygórzewski – Chief Analyst at and Walutomat

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