fot. We check what’s next with the euro (EUR), dollar (USD), franc (CHF) and pound (GBP)
Inflation in the US slowed down in June stronger than expected, clearly limiting expectations for an increase in stthe Fed in September. The result was a significant weakening of the dollar – course €/US$ wzreight almost to 1.1150. These are new highs this year and the highest level since early 2022. However, the weaker dollar had a limited impact on CEE currencies, including the zloty. Course €/PLN it stayed at 4.44.
Also check: The dollar is sinking, and stock indexes are at their highest for over a year! US economy undergoes a “soft landing”
In reaction to inflation data, Treasuries strengthened from 10bps at the long end to 15bps at the short end. While the Bund gained almost the same scale as the US 10Y bond, the German 2Y gained only 7bp. Following this, TS also gained, from 10bps on the long end to 15bps on the short end.
Growth pressure €/US$ should slow down
The EUR/US$ exchange rate reached another important resistance (around 1.1150) already on Wednesday. Until the end of the week there are no such important data as yesterday. Therefore, we expect the pair to at least slow down at 1.1150, although we also do not rule out a return to around 1.10.
Also check: They’re gone, shock! Records have been broken!
The recent behavior of the zloty seems to confirm that the room for zloty strengthening is exhausted. The domestic currency practically stopped reacting positively to the weakening of the dollar. The zloty is still supported by domestic fundamentals, such as a trade surplus, but a drop of €/PLN significantly below 4.40 is becoming less and less likely.
Markets do not believe in September rate hikeoh in the US
Yesterday’s data changed the market’s perception of the Fed’s next moves quite significantly. While the July hike seems to be a foregone conclusion, investors no longer believe in the next one in September. The rapid decline in CPI also supports expectations for relatively imminent interest rate cuts. Therefore, by the end of the week, we are counting on declines in profitability in Germany and especially in the US, or at least stabilization.
Also check: The zloty exchange rate shot up! This happened for the first time since February 2022
The current TS yield levels, especially from the short end, are no longer consistent with the forward guidance of the NBP president. Therefore, unless there is a significant strengthening in the core markets, the TS should move sideways. We think that the next week’s domestic data will be weak, which does not herald a major rebound in yields in the near future.
Forecasts for top prices currencies: euro, dollar, pound and Swiss franc
2023-07-15 07:00:00
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