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The euro gets stronger and stronger (Daily analysis 15.07.2020)

15 Jul 2020 14:15|Bartosz Grejner

On Wednesday morning, the euro continued to appreciate. The EUR/USD exchange rate reached around 1.1460, the highest level since the second week of March. The euro was also the strongest against the franc and the yen for about a month. The zloty profits from this situation.

Race of vaccine manufacturers

The increased demand for the euro in recent days is a result of the positive effects of the fight against the pandemic in Europe (compared to, among others, the USA), as well as an increase in optimism about the growth path of the economy, especially in the Old Continent.

This positive sentiment was supported by reports made last night of promising results of the already advanced coronavirus vaccine tests of one of the US companies. According to ITV reports, positive results of vaccines developed in Europe are also expected to be published soon.

The zloty gets support

Therefore, optimism is clearly increasing. The market is also waiting for the weekend Eurogroup meeting. It could provide positive reports on the aid package for the economies worth around 750 billion EUR. For the zloty, the scenario taking place on the market is favourable.

With the globally weakened dollar, the USD/PLN exchange rate fell to 3.90 today, i.e. to the bottom line since the second week of March. The zloty also gains in relation to the Swiss franc and the pound, positioning itself among the best-performing currencies in emerging countries. The Polish currency is also appreciating against the euro, and the EUR/PLN exchange rate dropped below 4.47 today, although yesterday it was approaching 4.50.

The Union divides 750 billion EUR, and China puts cards on the table

However, in the case of the EUR/PLN exchange rate, the zloty has quite limited space for appreciation due to the globally very good condition of the common currency. A potential deterioration in sentiment may also put upward pressure on the exchange rate. Thursday may prove to be a test for the currently prevailing sentiment.

Tomorrow, the European Central Bank's decisions on monetary policy will be announced, but before that, China's macroeconomic data will be published in the early morning hours, including GDP growth in Q2, industrial production and retail sales in June. If the data significantly fail the economists' expectations (GDP growth expected by 2.4% y/y and 9.6% q/q), the zloty may lose some of its profits earned today.

15 Jul 2020 14:15|Bartosz Grejner

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

14 Jul 2020 17:24

Zloty at the forefront of the EM (Afternoon analysis 14.07.2020)

14 Jul 2020 14:24

Euro wins (Daily analysis 14.07.2020)

13 Jul 2020 17:56

Positive sentiment and good condition of the euro (Afternoon analysis 13.07.2020)

13 Jul 2020 14:03

Did the election result affect the Polish currency? (Daily analysis 13.07.2020)

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