The zloty weakens before the publication of the report from the US labour market (Daily analysis 4.09.2020)

While waiting for an important report on the US labour market, which investors have been looking forward to all week, the zloty remains under increased supply pressure. The EUR/PLN exchange rate exceeds 4.45, the GBP/PLN pair is approaching 5.00, and fluctuations are likely to increase further in the afternoon.

The dollar is stable despite the sale of equities

Friday is marked by a report on the US labour market for August. This is the most awaited moment by market participants this week, around which we will observe a significant increase in volatility on the broader market.

The dollar remains relatively stable against the main currencies. The EUR/USD quotations are still above the 1.18, around midday was 1.1850, which is just at the level of yesterday's closing, as is the case of the GBP/USD or the USD/JPY pairs.

Yesterday, there was a strong depreciation on the markets and the sale of equities in the USA. The strongest part of it concerned technology companies. With the dollar moving away from the bottom of the last two years, as well as slightly weaker macroeconomic data from both the US and the eurozone, the depreciation also affected assets perceived as more risky.

The EUR/PLN exchange rate is the highest since July

Among them is a large part of the currencies of emerging countries, especially the zloty, which is practically the weakest in the group of EM compared to the dollar, the euro, the franc or the pound.

At midday, the EUR/PLN exchange rate exceeded 4.45, which was recorded for the first time since July 22nd. In turn, the USD/PLN exchange rate, oscillating around 3.76, has been just below the upper limit for a month and the GBP/PLN exchange rate is just below 5.00, a level which it was last at almost two months ago.

No major publications or events are planned until the afternoon's report from the US Department of Labor. Quotations are likely to remain more or less constant. What will happen after publication? For the zloty, the worst-case scenario would be the appreciation of the dollar combined with further declines on the markets.

In that case, we could observe the weakening of the Polish currency. It is worth noting. However, that data from the US labour market published over the past few days may suggest that today's report may not be overly positive, which may limit the chances of the zloty's depreciation.