Yesterday we recorded a new long-term record for value of the dollar. At highest level it was worth nearly 4.28 zloty. The US currency is overbought, but at this moment there is no reason to assume that this will change soon.
The message from Federal Reserve was clear: we not only raise interest rates, but we accept market expectations for further rises. In case of Fed, such an attitude is not obvious. Its worth recalling that in March 2015 Fed was under a lot of pressure to remove from their statement that will be patient in making decisions about the first rate hike.
In fact, this statement was removed, but at the same time the message was so softened that the dollar began to lose very clear. Now it is different, even the president of Fed -Janet Yellen speaks of “faith in the US economy,” and does not shy away from a scenario of three increases in the next year. Because in any other developed economy, interest rates are not raised (in the emerging world hikes also are exceptions, such as Mexico, who tried to defend themselves against the avalanche of sell-of peso) such a change must strengthen the dollar and so it happens.
On the other hand, we must remember that the dollar has already discounted optimistic scenario. The market interest rate for the first time in a long time is consistent with the Fed and predicts three increases in next year, what is almost sure. Also, the potential for further strengthening of the US currency is moderate, at least in the near future. However,if the US economy will not fail, the dollar will remain strong in the coming months.
Key data from the US today will be the report at 14:30 we will know the statistics on new homes construction . After the unexpectedly strong data for October is expected to be slightly lower number of housing starts, but greater should be number of building permits. In Poland, we will know the data from the labor market, is expected gentle acceleration of wage growth (to 3.9% y / y), but at this moment it is not critical for the MPC. This publication will not therefore affect the exchange rate. Prior to 10:00 dollar cost 4.2460 Polish zloty, euro 4.4281 zloty gold franc 4.1251, while the pound 5.2792 zloty.
dr Przemyslaw Kwiecien