The dominance of positive sentiment on the market continues. The US currency remains weak: the EUR/USD exchange rate stays above 1.13, which is close to the upper limit of last month's quotations. Elections in Poland with limited impact on the zloty.
Monday started with a continuation of the increase in sentiment, which we observed already on Friday afternoon. The positive sentiment associated with the opening of economies and increased activity overshadowed the negative reports on the pandemic from some states in the USA, where there are record increases in the disease (including Florida). The calendar of significant macroeconomic events planned for today is basically empty, which supports the sentiment from last week.
Deterioration of US-China relations
Further tension in the geopolitical sphere is also observed. Last week, the White House administration imposed sanctions on some representatives of the Chinese Communist Party in connection with human rights violations. Today, the Financial Times reports, quoting a spokeswoman of the Ministry of Foreign Affairs, that China, in turn, will impose sanctions on four US officials.
If we add to this that last week, the US President Donald Trump ruled out the possibility of concluding a second phase of the trade agreement and China is struggling to meet even the first phase because of the pandemic, international trade issues may be among the factors threatening positive market sentiment.
Dollar not so popular now but the appetite for risk increases
However, the market does not care about international trade. The positive sentiment in the broader market was reflected in the following day's clear growth on Asian markets as well as in European markets up to midday. As a result of the increased appetite for risk, the dollar also dropped.
Today around midday, the EUR/USD quotations increased to around 1.1330. The fluctuation range was within those levels observed in the previous days, but today's quotations were already close to their upper limit of the last month, highlighting the current weakness of the dollar. The euro remains in good condition all the time, which is a result of managing well the effects of the pandemic in Europe (in relation to, among others, the USA).
Zloty stable after the election results
On Sunday, the second round of the presidential election took place in Poland. According to the preliminary results, Andrzej Duda will be the president of the second term, winning with a difference of about 2 percentage points. However, this had a very limited impact on the Polish currency.
The zloty's quotations against the main currencies were stable around midday; they were around Friday's closing levels. Although the EUR/PLN exchange rate gained about 0.3%, increasing to about 4.4770, this was a consequence of the globally stronger euro rather than the weaker zloty. With an empty calendar of macro events for the rest of the day, no significant changes in the valuation of the zloty should be expected.