__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.
Extremely weak session on equities, strong oil prices depreciation and serious movements in bonds have an unusually limited impact on currencies. The zloty, like most other currencies, remains stable.
The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.
Pronounced movements on broader market
Around midday, falls in futures contracts on the US indexes exceed 2%. The German market also loses more than 2%. Decreases of 4-5% are observed on crude oil, which loses its value due to fears of a lower than expected cut in production by OPEC and Russia, but also due to the risk of a weaker economic situation in subsequent quarters. The latter is indicated by movements on the equity market.
The yields of Treasury bonds continue to fall. This time slightly less on the long end of the curve and more on the short. In general, the market is very pessimistic. After all, even the reason for this risk aversion is worrying. The arrest of one of the main Chinese telecommunication companies' vice-president in Canada, even if it increases the risk in future business relations between Washington and Beijing, should not be the reason for such a strong sale. Therefore, the market must really fear a strong slowdown (reversal of part of the bond yield curve) and perhaps too hawkish attitude towards the expected economic conditions of the Federal Reserve.
However, a strong aversion to risk practically does not translate into the currency market at all. The EUR/USD pair is approx. 0.1% below the opening levels. The frank or the yen are slightly appreciating, but the changes in the range of 0.1-0.3% are symbolic, taking into account the fear of equities or crude oil and the downward pressure on the yields of the US Treasury bonds. Why is there such a limited reaction?
We already pointed this out in previous analyses. The signals from individual markets are not fully clear for currencies. Will the slowdown in the US economy increase the spread between the future interest rates of the Fed and the ECB? It is difficult to say.
The US "flu" may stop the Fed from increases, but it may also put more pressure on the economies in the eurozone and result in a lack of monetary tightening in the eurozone. China's problems are likely to have a greater impact on Europe and Asia, but if the Middle East is severely hampered, the US may also be affected. Part of the capital may return to safe havens (yen, franc). Is it really worth withdrawing this capital from emerging markets, when the situation in the domestic market may also deteriorate relatively quickly? As a consequence of too many mutually-negative signals, there is a stabilisation of currencies.
Zloty depreciates but slightly
The external situation for emerging market currencies is not positive, but it is also not dramatic. The lack of a strong move towards safe havens and falling oil prices reduce the negative impact of equity changes. Also, lower yields of the US Treasury bonds reduce the disproportion of future interest rates between economies where monetary policy movements were not expected anyway. This means a slight weakening of the zloty and confirms signals from the global currency market.
After yesterday's meeting of the Monetary Policy Council, little additional information was received. The Council aims to leave interest rates unchanged, and recent reports tend to reinforce this position. An important moment for the zloty will be the beginning of the session in the USA. We will see what data will come from ISM and ADP, as well as whether the spot market will continue the discount observed on futures contracts. If the situation does not deteriorate dramatically, the moderate weakening of PLN is unlikely to deepen.
Subscribe to our currency newsletter
See also:
Limited changes for euro and dollar (Afternoon analysis 5.12.2018)
Market can't find balance (Daily analysis 5.12.2018)
Zloty may weaken (Afternoon analysis 4.12.2018)
Dollar below in red (Daily analysis 4.12.2018)
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