The waiting game begins (Daily analysis 24.05.2021)

24 May 2021 8:58|Bartosz Sawicki

The foreign exchange market had a very lethargic start to the week. If one is tempted to pinpoint a trend, it would be a minimal weakening of the dollar.

On Friday, the US currency was gaining strongly, and this movement should be seen in terms of a rebound. However, there is no sign of rest on the cryptocurrency market, which cannot recover from last week's plunge. A large part of Europe is celebrating Pentecost today, which will not support volatility in currencies either. Also, in a broader sense, the market may go into a wait-and-see phase ahead of the very important Federal Reserve meeting on June 16th. The latest batch of data from the USA is inconclusive. In April, the labour market was weak, retail sales did not increase, while inflation was the highest in a decade.

Strong US April PMI data boost the greenback

The US PMI indexes published on Friday came in at record highs. Especially in the case of the services index, which significantly beat expectations based on the wave of opening the economy. These readings were the ones behind Friday's rise in the dollar. It is becoming increasingly evident that the economic rebound has a choppy and jerky nature. In particular, the labour market report for May (released on June 4th) will be under scrutiny soon. As a result, further significant declines in the US currency may be delayed.

In the case of the CEE3 region, the Hungarian central bank's decision will be particularly important, as it announced last week that it would respond to the strong inflation of over 5% with a rate hike already in the first half of the year. These comments were water for the mill to strengthen the forint, which gained about 2% against the euro and the dollar and was the strongest representative of the emerging basket. In the USA, the most important data will be consumer sentiment, information from the real estate market, and GDP revision for the Q1. Investors will also be monitoring numerous speeches by FOMC members, also due to the upcoming two-week media blackout ahead of the Federal Reserve's June meeting.


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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:

20 May 2021 9:35

The US dollar briefly regains traction (Daily analysis 20.05.2021)

19 May 2021 10:40

The dollar rate continues to fall; the euro exchange rate stopped (Daily analysis 19.05.2021)

18 May 2021 9:53

The US dollar goes below in red, the pound appreciates (Daily analysis 18.05.2021)

13 May 2021 9:24

Inflation data spooks the markets (Daily analysis 13.05.2021)

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