The words of the Chinese Parliament vice chairman, who stated that China will want to purchase strong currencies such as the Euro to diversify  their currency reserves, proved to be another booster for the increase on the EURUSD market.

Even though the week also brought good information from the US economy such as growing labor productivity, decreasing labor costs and better than expected results regarding the ISM-Services Index and the trade balance, it has to be stated that even good macroeconomic data is not able to help the ailing US economy.

The weakness of the Dollar could be observed on the USDPLN market, which fell to the record level of 2.4562. Another factor adding to the strength of the Zloty is the high probability of yet another hike in interest rates this month during the Monetary Policy Council meeting.

Obviously markets should now slow down and form short term corrective movements, but I believe that in the medium term the only possible direction for the EURUSD is the increase trend, whilst the only possible direction for the USDPLN is the decrease trend.

Omar Arnaout