Currency Report<BR>
EUR/USD
The U.S. dollar continued to strengthen against the euro on Friday, as investors continued to shorten their euro positions on rumors of a European Central Bank (ECB) rate cut, and despite satisfying data from Italy and France.
The euro/dollar was also in focus ahead of German Chancellor Gerhard Schroeder's meeting with U.S. President George W Bush on Friday, at which the subject of the dollar's weakness was expected to be raised. A clearer picture is not expected to emerge from the foreign exchange markets until after the end of this week, when the ECB holds its council meeting and the USA releases critical payroll figures.
The market will remain sensitive to remarks out of the Schroeder-Bush meeting, as the euro has reacted quite strongly to comments from European leaders recently.
USD/PLN
Poland's złoty and bonds rose soon after opening on Friday, encouraged by the final blueprint of government fiscal reforms, which showed budget savings of 18 billion, two billion more than earlier planned.
The złoty was up 0.4 percent against both the dollar and euro, while bond yields fell by up to seven basis points across the yield curve.
The złoty was also helped early by the conclusion of a large hard currency order from a foreign player, which sparked one percent losses for the Polish unit against both dollar and euro on Thursday.
But sentiment is liable to stay shaky until opposition parties decide whether to support the government in the first votes on bills implementing the reforms this week.
According to the final version of the plans, if fully implemented, the bills will cut Poland's borrowing needs by zł.54 billion ($13.87 billion) in 2004-2007.
The U.S. dollar continued to strengthen against the euro on Friday, as investors continued to shorten their euro positions on rumors of a European Central Bank (ECB) rate cut, and despite satisfying data from Italy and France.
The euro/dollar was also in focus ahead of German Chancellor Gerhard Schroeder's meeting with U.S. President George W Bush on Friday, at which the subject of the dollar's weakness was expected to be raised. A clearer picture is not expected to emerge from the foreign exchange markets until after the end of this week, when the ECB holds its council meeting and the USA releases critical payroll figures.
The market will remain sensitive to remarks out of the Schroeder-Bush meeting, as the euro has reacted quite strongly to comments from European leaders recently.
USD/PLN
Poland's złoty and bonds rose soon after opening on Friday, encouraged by the final blueprint of government fiscal reforms, which showed budget savings of 18 billion, two billion more than earlier planned.
The złoty was up 0.4 percent against both the dollar and euro, while bond yields fell by up to seven basis points across the yield curve.
The złoty was also helped early by the conclusion of a large hard currency order from a foreign player, which sparked one percent losses for the Polish unit against both dollar and euro on Thursday.
But sentiment is liable to stay shaky until opposition parties decide whether to support the government in the first votes on bills implementing the reforms this week.
According to the final version of the plans, if fully implemented, the bills will cut Poland's borrowing needs by zł.54 billion ($13.87 billion) in 2004-2007.
