Currency report: Złoty loses value

In spite of significant data released recently, the market in early August was totally transfixed by the European Central Bank's (ECB) interest rate decision and the press conference at which ECB chairman Jean-Claude Trichet announced it.

Interest rates remained unchanged at the level of 4.25 percent, but during the conference, Trichet expressed his fears concerning euro zone inflation and low economic growth. Investors expected some clue as to a future, but to no avail.

This seemed enough for the EUR/USD market to plummet to the $1.51 level, despite worse-than-expected readings from the US labor market. The strengthening of the UScurrency was also aided by better-than-expected pending home sales from the US.

The appreciation of the US dollar caused a significant corrective movement on commodities markets and above all oil, which stood at $115 a barrel on August 8, and gold, which stood at $860 an ounce.

It should also be noted that the Federal Reserve decided to keep rates unchanged at the level of two percent. However, this had no effect on the EUR/USD market.

As for the Polish market, there was growing fear of another interest rate hike. Economy Minister Waldemar Pawlak said that the strong złoty was a threat to the Polish economy, and that the Ministry of Finance should be engaged in finding a solution to the problem.

In any event, the Polish currency lost value against all major currencies. On August 8, the USD/PLN and EUR/PLN stood at zł.2.17 and zł.3.27, respectively.

Jakub Paturalski, X-Trade Brokers Dom Maklerski SA