__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.
The EUR/USD pair remained close to the 1.2500 boundary (close to three-year highs). The emerging market's currencies appreciated and the zloty was listed at the forefront of the quotations. The EUR/PLN pair remained close to the 4.15 level.
A day ago, the market seriously wondered how the US investors would react to the higher than expected inflation and weaker retail sales. The initial reaction, which assumed sharp drops at the opening of the US session, was relatively logical. Higher inflation, with tighter monetary policy and weakening economic conditions (low consumer demand), is unlikely to be positive for shares.
Only sentiment matters
However, it soon turned out that unfavourable economic data and depreciation on the US market became an excuse to buy shares in the USA and not to sell them. Moreover, opinions appeared that the weaker retail sales could rather be a one-off event (January may sometimes be disturbed by e.g. weather issues or problems with seasonal adjustment). Also, the risk of a faster inflation growth pace (without overall prices in month-on-month core terms has risen the fastest in more than 10 years) has not caused any long-term concern in the share market, even though the debt instruments market has reacted to it.
Therefore, the sharp improvement of the sentiment was contrary to economic data. Of course, such things can happen, but in the long term, moves against economic readings will be difficult to maintain.
The sentiment's improvement (initiated in the USA) has been translated into the currency market. The dollar weakened and the currencies of the emerging markets clearly appreciated. The zloty was by 2.7% stronger than the dollar in relation to Friday's closing. Only three currencies from 31 developed countries achieved a better result than the zloty. They were the Colombian peso, Russian ruble and South African rand (ZAR was also supported by political events in South Africa).
The movements range was probably large due to the general participants' surprise on the quotation course after data from the USA. Betting against such a strong sentiment return was risky, so the opposite positions were quickly closed, increasing the scale of optimism in EM currencies and pessimism in the dollar.
After yesterday's events, we can draw only one conclusion. The currencies' reaction is almost entirely influenced by the share market. Moreover, US trading is characterized by incredible returns of sentiment. Until the situation calms down and the currencies find references in a given macro or monetary policy perspective, their volatility may remain chaotic.
Subscribe to our currency newsletter
See also:
Inflation up, dollar down (Daily analysis 15.02.2018)
Surprising US data (Afternoon analysis 14.02.2018)
Important US data (Daily analysis 14.02.2018)
Waiting for Wednesday (Afternoon analysis 13.02.2018)
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