Currency report: Continuing trends

The US Federal Reserve cut rates once more by 25 basis points, while both the Monetary Policy Council in Poland and the Bank of Japan left rates unchanged.

Even though the dollar weakened initially after the US rate cut, it is currently growing in strength against both the euro and the złoty.  Forthcoming macroeconomic data will be, to some extent, an answer as to whether rate cuts are the right cure for the plummeting US economy or whether another solution should be sought.

On the other hand, even if macroeconomic data from the US is better than expected in the next few weeks, nothing more than a corrective movement should be expected. Time is needed for the situation in the US to change.

Friday's US payrolls data was much better than anticipated, with an increase of 166,000 new work places against an expected increase of 82,000. All in all, I think that the EUR/USD should return to its strengthening trend after a correction, heading towards the level of $1.465 or even higher. The USD/PLN should be influenced by this movement and continue its decreasing trend after a correction.

Omar Arnaout X-Trade Brokers Dom Maklerski SA