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Currency and Stock Markets Weekly Outlook

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Markets have not been so nervous since a very long time

Fri, Oct 3 2008, 14:00 GMT
by Adam Narczewski

X-Trade Brokers, XTB

Markets have not been so nervous since a very long time. Volatility on many currencies increased to over 20% during one week! On Tuesday, the American Congress rejected Paulson’s plan, which was designed to lift American banks from the crisis. The Congress did not like the idea to use public money ($700 billion) in order to cure the current situation. On Thursday though, the re-designed plan was accepted by the Senate. Everybody is holding their breath to see if it is going to work and if the planned $700 billion expenditure will be enough.

Since the beginning of the week the American currency kept gaining. It seems that American investors are cashing their investments abroad and the dollar is coming back home. Dollar appreciation is happening despite worse than expected news from the U.S labor market (nonfarm payrolls decreased by 160K against the forecasted 90K decrease). No change to the situation was European Central’s Bank decision to keep interest rates unchanged at 4.25%. The EUR/USD declined from $1.4450 to $1.3790 throughout the course of the week.

The current global situation and the strengthening dollar have great impact on the Złoty market. Investors are quitting risky investments, including the Polish currency. Fear, that the global crisis will cause an economic slowdown in Poland caused the Złoty to decrease. The EUR/PLN climbed from zł.3.3580 to zł.3.4290 while the USD/PLN increased from zł.2.3190 all the way to zł.2.5010.

Published on  Fri, Oct 3 2008, 14:02 GMT