Back to the trends
Ending the week is a real flood of signals for the global currency market. The most important of these was the meeting of the Federal Reserve. Janet Yellen confirmed the exit strategy of zero interest rates and suggested to start tightening monetary policy in the middle of next year. In addition, according to the US FOMC macroeconomic forecasts the economy will grow at a rate in excess of 2.5% y / y and the surrounding area unemployment drops to 5% in the coming quarters.
The head of the Fed has also confirmed that the decline in energy commodity prices will be beneficial for the US, despite the fact that the mining industry may suffer a lower valuation of crude oil. As for inflation, it may fall below 1.5%, but it will be mainly caused by cheaper fuel, so the transition factor.
This message should therefore be seen as a positive for the US dollar, because despite some downward pressure on inflation, the Fed is not going to go back on their plans to raise interest rates because of the good condition of the economy. Appreciation of the dollar, especially for currencies such as the euro or the yen, should therefore be continued for at least the first few weeks of 2015.
Negative interest rates on deposits in Switzerland
Unexpected enter a negative deposit rate (minus 0.25%) in Switzerland on January 22, 2015 is good news for borrowers at least two reasons. Firstly, this should weaken the franc. For a while we had a “foretaste” of this on Thursday, but the game market and the weakening of the zloty that pair CHF / PLN movement was hardly noticeable.
The closer but we claim from January 22, the greater the pressure should be brought to an increase in the EUR / CHF. Rise of the euro-franc from 1.20 to 1.21 is about 3 cents less on the CHF / PLN. Another positive element is probably the descent LIBOR below zero. This will mean slightly lower payments for borrowers.
Decisions Swiss Central Bank (SNB) also show a fairly strong determination of the monetary authorities from Zurich to weaken the franc against the euro. If the decision announced yesterday did not result in the weakening of the Swiss franc is probably the SNB may increase the activity of the foreign exchange market by selling the franc. And in this way, with unlimited resources of its own currency, at some point should be successful, resulting in more distant the EUR / CHF from 1.2000 level of at least about 100-200 pips.
Gold weaker than the ruble
The weakening of the zloty against the major currencies in the context of the Russian crisis is not surprising. Confusion within the region often negatively affects the economy neighbors. The real mystery is, however, the scale of the movement and the time offset. These facts require to approach this event with extreme caution.
Graph showing the pair EUR / PLN this week
Source: Bloomberg. The increase of the EUR / PLN means a weakening of the zloty against the euro
The culmination of the ruble weakening and the voltage on the Moscow stock exchange took place on Tuesday and Wednesday. In these days of Polish currency depreciated indeed, but most transactions take place within the limits of 4.22. In the following days the situation in Russia clearly stabilized, rising stock markets in Europe and the ruble regained all the losses.
Graph showing the pair PLN / RUB this week
Source: Bloomberg. The decrease in the PLN / RUB means a weakening of the zloty against the ruble
By contrast, in the second part of the gold week, rather than gain in value, clearly lost. On Thursday, EUR / PLN exceeded 4.25, and today we burst 4.28. This can not be explained by the somewhat weaker macro data, or the publication of a discussion at a meeting of the Council or the MPC voting results in November.
Changes therefore look to the aggressive play of speculative short-term capital, which theoretically using the favorable situation on the charts and the broad subject of the Russian crisis decided to swing the Polish market that even at the end of the year to improve the balance of its portfolio. In such cases often turn on the game real measures such. Companies that enhance the movement either through transactions on the spot market, either due to higher demand for derivatives. Not without significance is also activation of pending orders on the market, also associated with derivatives.
The current weakening of the zloty from very likely to be retained in the next week, although we can not exclude that “wipe away” by around 4.30 EUR / PLN or 3.57 CHF / PLN. In this case, however, you can expect verbal intervention from the National Bank of Poland, or sale of foreign exchange by BGK. It is possible, therefore, that as soon as the zloty weakened as soon begins to gain in value and should end the year at around 4.20 per euro and below 3.50 CHF / PLN.
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