This was to be the first week of answers, whether confidence and trust would return to the U.S economy. After the FED decreased interest rates by 50 basis points, investors were awaiting data from the U.S market hoping that results would actually be better than expected. Tuesday gave investors a glimpse of what they could be expecting from the rest of the week. Consumer confidence issued by the Conference Board fell to 99.8 pts, which has been the lowest since November  2005, whilst data from the National Association of Realtors showed that existing homes sales in August plummeted by 4.3% against an expected decrease by 3.5%. Negative data obviously did affect the Dollar, but the fall in value was not as big as analysts expected, due to the fact that investors believe that the U.S economy does need some time to adapt, after the FED’ cut and that the results of the cut would be observed in the upcoming months. The week continued with the flow of more negative feedback from the U.S economy. Most importantly it has to be mentioned that new home sales decreased by a shocking 8.3% against an expected decrease by 4.6%. This was the largest fall since June 2000. Similarly to previous data, the US Dollar reacted with a decrease in value, with the EURUSD market currently standing at 1.41 and coming closer to 1.42.

The situation of the Dollar, obviously does have a positive impact on the Zloty, where the growth of investor confidence and the fade away of aversion to risk, has caused capital to return to emerging markets such as Poland what could be seen on the USDPLN market, which noted an increase and is currently quoted at 2.65.  During the week the Monetary Policy Council left interest rates unchanged at 4.75% but analysts believe that a further hike during the year is very probable.

Omar Arnaout