After a period of consolidation, the EUR/USD is back on track to reach new record highs. The main impulse came from Germany, where the Ifo Institute informed that the Business Sentiment Index increased to 103.5 points from the previous 102.4. Much better-than-expected reading of the publication forced investor to believe again in the strength of the Euro zone’s economy. The EUR/USD advanced from $1.5490 to $1.5760 throughout the course of the week.

The weak dollar was the only currency that the Polish Złoty gained against, strengthening from zł.2.1830 to zł.2.1610. The Złoty performed much worse against the Euro and the Swiss franc. At the beginning of the week it seemed that another interest rate hike in Poland is possible since inflationary pressures are still strong. The Average Wages publication showed that wages in Poland increased by 12.6% during the last year while analysts forecasted only a 11.5% increase. On Wednesday the situation changed when the Core inflation showed a reading of 2.8%, lower than expectations. Such news sent the EUR/PLN all the way to zł.3.42, while at the beginning of the week it was quoted at zł.3.38, close to its all-time low. The CHF/PLN jumped from 2.0640 to zł.2.1065 during the week and it was the first such strong increase since mid-March.

Adam Narczewski