Adam Narczewski
Independent Analyst
Emerging markets have been struggling the last couple of weeks and the main reason was Turkey. That is why we all were waiting impatiently for Thursday when the Turkish central bank went all the way and hiked interest rates to 24%. Has this stopped the turmoil? Just a little bit. It sure gave a breather but the high risks remain. Let's keep in mind that the central bank's move was against what president Erdogan wanted. Obviously, the Turkish Lira appreciated and the stock market went up, helping other emerging market's assets. If the conflict between the central bank and Erdogan ends, it will be a great moment to enter the Turkish market. As for Poland, inflation (CPI) in August stood at 2%, which was widely expected. So no big changes here. Inflation remains under control and it seems that will not change in the next couple of quarters. More inflation-related macro data will be published next week as we will learn the average wages, PPI, industrial production and retail sales readings. As it was summer time, we do not expect and major surprises.
Looking at the EUR/PLN weekly chart, we see the market tried to break the 4.32 resistance, but like in the last couple of weeks, it was unable to do so. Is the PLN gaining power? It seems now that it is a good time for a corrective movement. There is a big chance the market will trade below 4.30 next week, with the first target at 4.28. Only a strong move north, along with breaking the resistance could trigger a move towards 4.36.
Pic. 1 EUR/PLN W1 Source: Meta Trader 4 Supreme Edition. Admiral Markets.
The reaction of the PLN against the USD was even stronger. The USD/PLN, which traded above 3.73 at the beginning of the week, is now touching the 3.67 support. If the market breaks it, the USD/PLN will head to 3.60 with the maximum move towards 3.54. If this does not happen, next week we will see the market trading in the 3.68 - 3.72 range.
Pic. 2 USD/PLN W1 Source: Meta Trader 4 Supreme Edition. Admiral Markets.
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