Currency report: Return to stability?

To investors' surprise, the National Association of Realtors published significant data last Wednesday detailing decreasing home sales on the US market. The EUR/USD market reacted by reaching record peaks, breaking the previous record of 1.3851.

Both Fed chief Ben Bernanke and European Central Bank head Jean-Claude Trichet gave speeches last week. Trichet noted that the risk of inflation is growing in the euro zone, signaling that interest rates may rise again. Meanwhile, Bernanke did not say anything about the Fed's plans for the FOMC meeting next week, but investors believe that US interest rates will decrease by 50 basis points, to 4.75 percent.

The Polish złoty grew in strength against other currencies and especially the dollar last week. Aversion to risk seems to be fading and investors are becoming more bold. On Friday the USD/PLN was quoted at 2.72, while the EUR/PLN was quoted at 3.78.

Omar Arnaout X-Trade Brokers Dom Maklerski SA