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Daily analysis 22.08.2017

22 Aug 2017 12:25|Bartosz Grejner

After yesterday's depreciation, the US currency has been paring some losses. On the other hand, the aggravating Brexit process has set down new highs in the euro's value in relation to the pound since October 2009 (excluding "flash crash"). The trading of the Polish currency has been characterised by low volatility.

The most important macro data (CET - Central European Time). Surveys of the macro data are based on information from Bloomberg unless noted otherwise.

  • No macro data that can clearly influence the analysed currency pairs.

Greater appetite for risk

Yesterday, another day of increased risk aversion was observed. In the second part of the day, the dollar has been particularly weak - the dollar index (DXY) has fallen below 93 points to its lowest level in 10 days, while the EUR/USD rate has appreciated to more than 1.18, reaching its highest weekly peak. However, we have been seeing a gradual strengthening of the US currency, which increased the pace in the morning when European investors became more active.

The DXY index has risen above 93 pts and the EUR/USD pair has incurred losses to approx. 1.176, reversing all of yesterday's appreciation against the dollar. On Tuesday morning, we observed a greater appetite for risk, compared to the previous two trading days. The main European stock indexes have gained approx. 0.5% and assets regarded as "safe havens" (the yen, the franc and the gold) have been slightly lowered. The changes on the foreign exchange market have been relatively limited due to the absence of macroeconomic publications today.

Despite the fact that the dollar has been recovering losses, the drop in the pound's value, (under pressure due to talks between the UK government and the EU about Brexit) has also been noted today. Despite a slightly weaker euro today, the EUR/GBP rate set new peaks (approx. 0.917) since October 2009, excluding the sudden and sharp exchange rate increase in early October last year, in connection with the so-called "flash crash."

Today around midday, in relation to the dollar, the British currency has been losing approx. 0.5%. The GBP/USD has fallen to approx. 1.283, reaching its lowest level since late June. The uncertainty associated with the Brexit process with good economic conditions in the eurozone will likely continue to put supply pressure on the pound. Moreover, lower inflation in the UK economy has reduced the likelihood of tightening the monetary policy, which has also weakened the pound.

The zloty's stable trading

The absence of significant macroeconomic events have also affected the limited zloty's volatility. Although, in relation to the globally stronger dollar, the Polish currency incurred losses today- this rate has still been in the relatively narrow trading range that was observed over the last two weeks, i.e. 3.61 - 3.67. The USD/PLN has risen around midday to the level of approx. 3.638, close to the opening of yesterday's quotations.

In relation to other main currencies, the zloty's exchange rate has been stable. This week, there are no scheduled significant macroeconomic publications. Therefore, the trading of the zloty will probably follow a global sentiment to which the Polish currency has been especially sensitive. On Thursday, the economic conference in Jackson Hole (USA) is being held, and we can expect an increased volatility till then, especially on Friday, when Mario Draghi (the president of the European Central Bank), is scheduled to give a speech.

 

22 Aug 2017 12:25|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:

21 Aug 2017 15:05

Afternoon analysis 21.08.2017

21 Aug 2017 12:06

Daily analysis 21.08.2017

18 Aug 2017 15:30

Afternoon analysis 18.08.2017

18 Aug 2017 12:20

Daily analysis 18.08.2017

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