What caused the depreciation of the American dollar was the worsening investment climate on global stock exchanges causing an exodus from assets denominated in U.S dollars. Macroeconomic news that were published later on during the week, caused the EURUSD to retreat all the way to 1.5850. The main reason for this correction movement was higher than expected publication of U.S CPI. Inflation in America grew by 1.1% on a monthly basis and to 5% on a yearly basis. Such news brought the discussion back about considering hiking interest rates in the U.S. Surprisingly good news from the American housing market were published on Thursday. According to them, housing starts increased by 9.1% while building permit by 11.6% in July, way above expectations. Is the crisis caused by the housing market really over? Probably not but the first signs of recovery are pretty visible.

The Polish currency continued gaining value. Confirming strong inflationary pressures were Tuesday reports about wages (increase by 12% against the 11.1% forecast) and Polish CPI (4.6% against 4.5% expectations). Another interest rate hike in Poland is still a great possibility. The global increase of oil and food prices is somehow neutralized by a strong currency but still inflation is increasing. The demand for the Polish currency is still strong. Even worse news from the economy, like Friday’s industrial production report (7.2% in July against the forecasted 9.6%), do not change the whole picture. The EURPLN dropped from 3.2550 to 3.2140 throughout the course of the week. Meanwhile, the USDPLN decreased from 2.0525 all the way to 2.0260. There are no signs that the Złoty might stop gaining but a correction movement is expected.

Adam Narczewski