Currency report: Dollar rules the markets

A lack of political information decreased the volatility on the EUR/PLN and USD/PLN and the pairs moved along with the EUR/USD. The strength of the złoty is surprising when compared to other currencies, which are falling against the dollar. Investors say the złoty is artificially held at current levels by the Finance Ministry, which is selling foreign currencies from bonds issued abroad. If the new government stops the intervention, the złoty could easily lose against the major currencies.

The dollar marked new two-year highs against the euro, Japanese yen and British pound this week. A powerful up-trend started on Monday, as investors wanted to continue the bullish momentum. After failing for three consecutive days to break below the $1.164 area and for six straight days to close below $1.1680, the EUR/USD finally mounted a more respectable recovery on Thursday. The pair went as high as $1.175 but investors decided to finish the correction by selling euros. In the coming week we could see further dollar gains but a larger correction is also possible.

Maciej Chojnacki

WGI Dom Maklerski