Dollar cheapest in 7 years. The market is counting on “pigeons” Fed

The American dollar records broke the July minimum and in relation to Złoty went to the lowest level since May 2018. In turn, the Euro-Dolar pair established a new peak, checking in for at most for 4 years.

Financial markets are preparing to resume the cycle of interest rate reductions in the federal reserve. In turn, the Fed Board is planted by President Trump's people, which increases the chance of a “political” rate reduction by up to 50 PB. The reaction of the market was the further weakening of the dollar, which at the Euro-Dolar pair manifested itself in the new peak of the current growth wave and breaking the July maximum.

At the euro after over $ 1.18, the latter on the Polish market was the cheapest in over 7 years. On Wednesday morning, the USD/PLN exchange rate was below PLN 3.57 and thus broke the long -term minimum from the beginning of July (PLN 3,5858). At 9:55 the dollar cost PLN 3,5909.

However, absolutely nothing happens on the euro-gold steam. The euro exchange rate on Wednesday morning was PLN 4.2530, without major changes in relation to the state from Tuesday evening. From April, the EUR/PLN exchange rate has been in the range of PLN 4.23-4.31.

The event of the day on the financial markets will be an evening message from the federal reserve. It is expected that the central bank will reduce interest rates by at least 25 PB. And it will signal the beginning of a series of loosening monetary policy. Market participants have been positioning for several weeks under this scenario. Therefore, possible disappointment may result in a decisive strengthening of the dollar and a retreat from risky assets.

– On Wednesday, this is the reception of the FED decision and, above all, new macroeconomic projections and the transmission of the conference of J. Powell, will be of key importance for the behavior of the dollar, which was historically negatively correlated with EM currencies – PKO BP analysts wrote in the morning report.

In their opinion, the FX market FED has already valued the Fed Reception, but there is still room for a market reaction if the message from this meeting would be strongly pigeons. – In this case, we would expect further depreciation of the dollar and a decrease in USD/PLN exchange rate deep into the support zone 3.5550-3.5800- added PKO BP experts.

Instead, Frank Szwajcarski gained, in the morning valued at PLN 4,5592. For the previous 24 hours, Frank managed to increase by 1.6 grosze. You had to pay PLN 4.8967 for the British pound. In this way, Szterling's ratings to the zloty approached this year's minimum of PLN 3.8522.

KK

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