The beginning of the new year brought a visible strengthening of the Polish currency, for which stand domestic factors, but also those from abroad. Publication of good data from the domestic economy coincided with sell-off of the dollar, to the benefit of currencies of emerging countries, including PLN.
Minutes of the December FOMC meeting did not reveal details of new breakthrough – although stressed that the rate increases to a large extent will depend on the scale of fiscal stimulus, but this already was mentioned in last month’s Janet Yellen. Publication gets together the history, which lived markets for nearly a month. The December rate hike and the increase in median dot-charts (points to three moves of the Fed in 2017) helped the dollar strengthen against other currencies. Minutes partially end this subject, giving funds an excuse to take profits from long positions taken in previous weeks. However, this does not mean a definite weakening of the USD. Already on Friday we will know the data from the US labor market for December – a good NFP report may again encourage the markets to buy the dollar.
A cheaper dollar is good news for emerging markets. Especially because in the last few days clearly strengthened Chinese yuan, whose weakness could become a hotbed of another financial crisis. Dismiss of these concerns favors such currencies as PLN, which also was supported by strong data from the Polish economy. In recent weeks of previous year we witnessed acceleration of economic growth, and the PMI for the industry suggests that the beginning of 2017 should not disappoint. Therefore pair EURPLN fell yesterday to a level of 4.35, the lowest since the US presidential election.
Today we will know some relevant data from major economies. Much attention will attract figures from the US labor market, which will provide guidance before the aforementioned report NFP. In midday we will know minutes of the December meeting of the European Central Bank at which it was decided to extend the program of quantitative easing. A mention of the possibility of extinction of the program can become a catalyst for movements in pairs related to the euro, including EURPLN.
Jakub Stasik XTB