__cfduid
Valid: 29 days
It helps us protect the website from threats such as hacker attacks. Used by Cloudflare to recognise trusted network traffic.
__lc_cid
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
__lc_cst
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
rc::a
Valid: It does not expire
Cookies to correctly distinguish between human and bot-generated traffic.
rc::b
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
rc::c
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
NID
Valid: 6 months
Records a unique number to recognise the device you are using. It is used for advertising.
_ga
Valid: 2 years
Registers a unique user number to collect statistical data about how you use our website.
_gat
Valid: 1 day
Used by Google Analytics to reduce queries. Reduces the amount of statistical data collected.
_gid
Valid: 1 day
Registers a unique user number to collect statistical data about how you use our website.
yt-player-bandwidth
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
yt-player-headers-readable
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
Positive sentiment is being overshadowed by reports of protests in most US states or further signs of worsening geopolitical tensions - the dollar is still weaker, the zloty is stronger. Surprise comes on the Chinese industry, which in May practically returned to pre-pandemic growth.
The US-China situation is getting worse and worse
The first trading day of the new week started in a relatively positive sentiment, which was a continuation of something observed also last week. The market continues to be detached from current realities and focuses on future growth in economic activity linked to the lifting of restrictions.
And the reality has been getting more and more dramatic lately. The protests in most US states last weekend and the imposed curfews in some cities may make it difficult to return to an increase in activity, one that may be slightly slower than expected. In addition, the first phase of the trade agreement between the US and China is beginning to show new flaws.
According to Bloomberg's reports, two Chinese state-owned trading companies (Cofco and Sinograin) have been instructed to stop buying some US goods, including soya. This is another "step" towards worsening relations between the US and China, which, with the approaching US elections, will probably once again not be significantly mitigated (if at all), and two will start to burden market sentiment.
Industry goes up
The market sentiment, as economies open up in the meantime, also gets positive information. The PMI index of Chinese industrial companies published this morning unexpectedly indicated an increase in May. The reading at 50.7 pts. exceeded market expectations by 1.1 pts., thus basically returning to pre-pandemic levels (51.1 pts. in January).
How the economy in China is coming back to life may be an indication of what to expect in other parts of the world in the weeks to come, given that China may have lifted restrictions a little earlier than the rest of the world. This is a positive stimulus for the market, although the final path to return to pre-pandemic GDP levels will depend on how consumer demand will develop in the coming months.
The weaker dollar still helps the zloty
Despite the potential problems and supported by central bank actions, the market remains "optimistic", which is reflected, among others, in the continuing weakness of the dollar. The EUR/USD exchange rate remained above 1.11 until midday today, close to the upper limit since mid-March. Together with, for instance, increases in the equity markets, it makes it possible to maintain a relatively high level of risk appetite for most emerging currencies, including the Polish currency.
The zloty did not react particularly strong to the unexpected cut (by 0.4 percentage point) of interest rates by the NBP, which is mainly due to the prevailing positive market sentiment related to the global lifting of restrictions. The EUR/PLN rate dropped even slightly below 4.42 around midday (on Friday it was still around 4.43-4.46). The globally weaker US currency contributed to a further drop in the USD/PLN pair to about 3.96 - the lowest level since mid-March, similar to the EUR/USD pair.
In the afternoon, we will also see the PMI (from the ISM institute) data on industrial activity, which are relevant for the dollar. They may increase fluctuations in the dollar, but they are unlikely to affect it fundamentally - a weaker dollar is now a sign of recovery and even a higher reading from ISM does not necessarily strengthen it.
Subscribe to our currency newsletter
See also:
The income of the Americans has been raising the fastest since the war (Afternoon analysis 29.05.2020)
Another day of dollar weakness (Daily analysis 29.05.2020)
National Bank of Poland surprises (Afternoon analysis 28.05.2020)
The zloty appreciates in relation to the dollar (Daily analysis 28.05.2020)
Attractive exchange rates of 28 currencies
Live rates.
Update: 30s
Open your free account today
Save your time and money. Create an account for free and discover how much you can gain. Join us today, and start using attractive currency services.
Create free account