It could be recognized that investors were not ready to react to any markets data, feeling that the Federal Reserve would react to the situation and bring back stability to the U.S economy, at least to some extent. To investors’ surprise the National Association of Realtors published significant data on Wednesday, with regard to decreasing home sales on the U.S market.

The EURUSD market reacted by reaching record peaks, breaking the previous record level of 1.3851. What has to be also mentioned is that on the day both Ben Bernake and Jean-Claude Trichet gave their speeches. Whilst Bernake’s speech did not involve the current slump in the U.S economy, Trichet stated that the risk of inflation is growing in the Euro-Zone, signaling that interest rates may have to be increased once more in the near future. Although Bernake did not say anything about the Federal Reserves plans for the FOMC meeting next week, investors currently believe that interest rates will not be decreased by 25 basis points, but by 50, to the level of 4,75%. Later in the week, the U.S economy produced more negative data with regard to retail sales which increase by 0.3% m/m against an expected increase by 0.5%, and industrial production which increased by 0.2% m/m against an expected increase by 0.3%.

The Polish Zloty on the other hand grew in strength against other currencies and especially the US Dollar. The aversion to risk is seeming to fade and investors are starting to invest their money once more. Currently the USDPLN is quoted at 2.72, whilst the EURPLN is quoted at 3.78.

Omar Arnaout