Sentiment calmed down (Daily analysis 9.09.2020)

Improved sentiment in the market pulls the supply pressure from the zloty. However, the dollar continues to appreciate, with the EUR/USD exchange rate at its lowest level in a month. For another day in a row, the pound loses value, and the GBP/PLN exchange rate drops below 4.90 PLN.

Wednesday started in slightly better sentiment. There was no longer a widespread aversion to risk observed on Tuesday. The main market indexes in Europe gained about 1% at midday. Oil prices were also rising, which yesterday fell by 9%.

More and more factors support the dollar

With such peace on the broader market, a little greater calm surrounded most of the currencies of emerging countries, which in recent days were under supply pressure. Today, the zloty recorded slight changes in relation to the euro (4.45), the dollar (3.79) and the franc (4.12).

However, these levels are still very close to the upper limit of quotations from the end of July. The Polish currency is kept in a weakened state by the dollar in the global market. Yesterday, the EUR/USD exchange rate tested around 1.1760, which is the lower limit since last month. And today, after a small increase to nearly 1.18, the main currency pair is again rated at 1.1760.

A fall below this level may, in turn, open the way for further increases in the dollar, also weakening the zloty basket. Factors that can strengthen the dollar are accumulating more and more. These include improving macroeconomic data from the US while statistics from the eurozone weaken, as well as the falling number of coronavirus cases in the US with an increase in the number of daily illnesses in Europe, the upcoming US presidential election, increased geopolitical tension between the US and China, and tightening rhetoric surrounding the UK trade agreement with the European Union.

The pound's quotations are going down in red

Although the market did not respond to all of the aforementioned factors during the holiday period, their aggravation and accumulation may ultimately support the dollar. The pound, in turn, is being increasingly affected by the already mentioned difficulties in negotiating a trade agreement.

Today, the GBP/USD quotations fell below 1.30, which is the first time in more than a month, due to the coincidence of dollar increases and pound losses. However, if we look at the relationship between the euro and the pound, we also see strong increases here. The EUR/GBP exchange rate, exceeding 0.91, has now risen to its highest level in over a month. This also translated into the GBP/PLN exchange rate, which fell below 4.90 PLN the first in two weeks. Given the proximity of the deadline (October 15th) for agreement between the United Kingdom and the European Union, we can expect the volatility of the pound to increase, with supply pressures prevailing.