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Afternoon not favourable to the dollar (Afternoon analysis 8.07.2020)

8 Jul 2020 17:13|Bartosz Grejner

Increased supply pressure on the US currency strengthens the euro and the franc on the global market. The EUR/PLN and the CHF/PLN exchange rates are the highest since May 26th.

The price of gold is heading towards a record

Along with the afternoon's increase in the activity of US investors, the supply pressure on the dollar also intensified. The EUR/USD quotations increased from about 1.1280 to 1.1340 in less than an hour after the start of the session in the USA. These levels were observed this week; however, they are already at their upper limit.

The weakness of the dollar in the afternoon also had a clear impact on other assets. The price of gold rose to about 1818 USD per ounce, the highest level since September 2011. This is quite close to historical highs (about 1921 USD), and given the main factors that determine the value of gold and its current state - such as a weak dollar, low interest rates, growing uncertainty about the rest of the year, records may break, and they can do so soon.

The franc goes up, and the zloty is strong against the group

The weakened dollar brings the USD/CHF exchange rate to its lowest level since the second week of March, falling to about 0.937 in the afternoon. The stronger franc, globally, does not significantly affect the CHF/PLN exchange rate so far, but the levels of approx. 4.22 are already the upper limit of quotations since the end of May.

The upper quotation limit since the end of May was also reached by the EUR/PLN pair, moving in the afternoon to around 4.48-4.49. The zloty, however, is not weak; it is even among the best-performing currencies of emerging countries in relation to the euro or the Swiss franc. Increased demand for these currencies, however, is putting upward pressure on the EUR/PLN and the CHF/PLN pairs.

The globally weaker dollar caused the USD/PLN exchange rate to drop to around 3.95 this afternoon. Today's fluctuation range of around 3.95-3.976 is in line with what we have seen for several days.

The future fate of the zloty basket depends on how the value of the dollar will change in the market. We are currently observing an increase in supply pressure, which may cause (at least in the short term) rather limited increases in the EUR/PLN or the CHF/PLN. Limited, as the relatively good condition of the zloty in relation to other emerging country currencies, indicates that the probability of a significant drop in the value of the zloty in the coming days is small.

8 Jul 2020 17:13|Bartosz Grejner

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

8 Jul 2020 15:14

Another day full of optimism (Daily analysis 8.07.2020)

7 Jul 2020 18:02

Increased demand for the pound (Afternoon analysis 7.07.2020)

7 Jul 2020 14:58

New projections of the EC more pessimistic (Daily analysis 7.07.2020)

6 Jul 2020 18:17

Positive push from the US (Afternoon analysis 6.07.2020)

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