The PLN market weekly overview - Still close to crucial supports
|What a week we are having in Poland! Not on the Zloty market though but in politics. Yesterday (Thursday), Prime Minister, Beata Szydlo, has resigned (after two years of heading the ministry), which of course was the decision of the ruling party (to be precise - one person who rules the party…). It is expected she will remain in the government but on a lower position. Who will be the next PM? Mateusz Morawiecki, currently vice prime minister, responsible for the economy. He is a former banker (CEO of BZ WBK bank) and it seems the capital market is happy. I would not be so excited. Mr. Morawiecki for sure was a good manager but has little political background. Nevertheless, during the next couple of days we should learn what are his plans to make it better. This past week was also interesting as the MPC has decided to keep the reference interest rate unchanged at an all-time low of 1.5%. MPC’s governor, Mr. Glapinski, once more stated the central bank does not see a reason of hiking interest rates until the end of 2018. Well, that would mean the Polish MPC would not follow what other central banks are doing. The Fed is expected to hike interest rates, the BoE has already done that once. The ECB is lowering its QE program (a light but still hawkish move). So it will be interesting to watch if next year the MPC keeps its word.
There was not much going on the Zloty market this past week. Although we have to note, that the EUR/PLN has tested the 4.20 support, but was not able to break it. The market has rebounded but we should not expect major moves in December. If they happen though, a downward move can be extended if the EUR/PLN breaks the support. In such case, the next target for the market will be 4.18. On the other hand, the vision of no interest hikes plus the strengthening USD, might lift the market up towards 4.23, if the 4.21 resistance is broken.
Pic.1 EURPLN-ECN D1 Source: MT4 Supreme Edition, Admiral Markets
The USD/PLN was also unsuccessful in breaking its crucial support (3.52). Since then, the market has rebounded and seems that a double bottom price formation might be forming. It is possible the market will continue its way up north as the stochastic oscillator suggests the USD/PLN is oversold. If so, we should expect it to reach 3.60 with the final target being the 3.64 resistance.
Pic.2 USDPLN-ECN W1 Source: MT4 Supreme Edition, Admiral Markets
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.