The American dollar gained against most of the currencies. The EURUSD, which started the day at 1.3625, dropped even to 1.3551 during the day. The weakening of the euro has to do with concerns that European financial institutions are more engaged in the US hig-risk mortgage crisis than the market actually expects. From the technical analysis point of view, breaking the 1.36 level by the greenback can be interpreted as a strong sell signal. Even more important for the greenback was falling against the euro below a crucial 1.3566 support level. At 16:00 ET though, the macroeconomic data published in the US weakened the USD. The ISM Manufacturing Index came at 52.9 against a forecasted 53.2. On the other hand, construction spending declined by 0.4% while analysts expected no change. The EURUSD slightly rebounded to 1.3573.

The Polish Złoty lost value against the major currencies following the trend established by the eurodollar. The USDPLN shoot all the way to 2.8213 while it was still quoted at 2.7957 in the morning. After 16:00 ET, the greenback retreated to 2.8149. The EURPLN rallied from 3.8129 in the morning all the way to 3.8282. In the afternoon the Polish currency rebounded to 3.8207. The Złoty is always sensitive to the behavior of the EURUSD. A further decline of the major currency pair in the world can lead to a bigger sell-out of the Polish currency. If the euro rebounds, so will the PLN. The Złoty is also affected by the realization of profits on the Asian and European equities markets. Such moves automatically increase risk aversion of investors, which in turns weakens the Polish currency.

Adam Narczewski