Dollar appreciates in the afternoon (Afternoon analysis 23.09.2020)

Mixed PMI data from the eurozone and the expected increases in activity in industry and services in the US resume demand for the dollar. The euro against the dollar drops to its lowest level since the last days of July. The supply pressure on the zloty increases as the risk aversion grows in the afternoon.

The US currency is back on track

On Wednesday afternoon, we observed the deterioration of positive moods in the first phase of the day. The main European market indexes lost most of the day's profits, and one hour after the start of trading in the US, their US counterparts were also below yesterday's closing levels. In the afternoon, the dollar started to gain again with the increased activity of US investors.

The main currency pair, i.e. the euro/dollar, fell in the afternoon to about 1.1660, the lowest level since July 27th. This is also a consequence of the mixed picture that came today from the PMI data from the eurozone, which, although still indicating a rapid increase in industrial activity in September, also signalled a return to a decline in activity in the services sector.

PMI gives an additional stimulus to the dollar

A slightly better picture was presented by analogous data on the US economy published later. PMI indexes showed a consistent continuation of growth in both industry and services. This improvement of data, both macro and coronavirus in the US in relation to the analogous data from the eurozone, also increases the demand pressure on the US currency.

The dollar's appreciation, combined with an increase in risk aversion contributed to further weakening of the zloty in the afternoon. The Polish currency was no longer in the best condition even around midday, when the dollar was slightly weaker and the risk appetite much stronger.

The EUR/PLN exchange rate, like yesterday, rose to nearly 4.52, the upper limit of this pair's quotation since the end of May. The renewed demand pressure on the dollar also contributed in the afternoon to a rise in the USD/PLN pair above 3.87, thus setting the highest level since July 21st. On Wednesday afternoon, the zloty lost to the majority of the main currencies, including the franc and the pound. Further appreciation of the dollar and continued deterioration of sentiment on the broader market may further weaken the zloty basket in the following hours.