As expected rates remained on the level of 4.00% and Trichet stated that the Euro Zone could be awaiting times of economic slowdown. This is a signal that the ECB could be thinking about a rate cut in the future. I believe this is highly unlikely in the first quarter and maybe even in the first half of  year. The decision did not have an instantaneous effect on the EURUSD market, but later in the day the market continued its surge in the downward trend. The strengthening of the US Dollar could not be backed by fundamental data though, with higher than expected unemployment claims together with worse than expected results with regard to Pending Home Sales and the ISM Non-Manufacturing Index. Currently I believe that the downward movement on the EURUSD market is over and we could be expecting another battle with the resistance level of 1.49.

As to the Polish market, then the Polish currency lost value against both the US Dollar and the Euro, mainly due to the decrease movement on the EURUSD market. Due to this I also believe that during the next week investors can anticipate the rise of value of the Polish currency with some probability of new record levels.

Omar Arnaout