The Polish Zloty experienced increased volatility this past week. The global macro situation has not changed - the Fed and ECB are still in play with their monetary policies while the main risk remains a global trade war. Although it has to be noted, that the market calmed down. It seems investors overreacted to the beginning of the trade war. Now, we are in a point, where everybody is thinking that either we will get a full trade war, or the situation will turn around and an agreement will be reached. The Zloty regained some ground this past week and the appreciation could have been stronger if the USD has not appreciated.
On the local market the "big" news was the MPC's decision to keep interest rates unchanged at 1.5%. It was widely expected but much more was expected from the press conference that followed the announcement. From that, we have not learned anything new - no hikes in 2018 and possibly in 2019. Another info came from the European Commission, which increased its forecast of Polish GDP growth from 4.3% to 4.6% in 2018 while expecting a growth of 3.7% in 2019. So we keep following the global situation as this will be the main driver of the PLN moves in the next couple of weeks.
The EUR/PLN finished last week below the crucial 4.36 level and continued its way south reaching even 4.31. This is a crucial support and of broken, the market will head towards its next target - 4.27. That is my basic scenario which will be negated if the EUR/PLN does not break the support. In this case, it will be heading back towards 4.36.
The USD/PLN was unable to break the 3.80 resistance the previous week. The market retreated towards 3.67 but was unable to break this support. This levle is crucial for the USD/PLN since breaking it should trigger a move first to 3.61 but possibly even to 3.54. Bouncing back from the resistance will be a sign the market could reach 3.73 next week.
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