Currency report: Złoty's march continues

The Monetary Policy Council surprised investors by increasing rates by only 25 basis points. This had an influence on the złoty, which noted a decrease against the US dollar, as investors had expected a hike of 50 basis points. A hike to the level 5.5 percent during the next year remains quite probable.

The US economy also received significant information from the still-ailing real estate market, where home prices dropped by 4.5 percent, against an expected decrease of five percent.

I believe that the following week will see the złoty strengthen further, aided by growth on stock markets and investor sentiment coupled with the weakening of the US dollar. I believe that the target for the EUR/USD market during the next week should be the psychological barrier of 1.50. However, levels of 1.5080 and 1.5098 are also quite probable.

Omar Arnaout, X-Trade Brokers Dom Maklerski SA