The American currency declined throughout the course of the week against all major currencies. The impulse came from the US Core Durable Goods publication, which showed a decline by 0.7% against the forecasted 0.5% increase. Worse news from the US economy brought the interest rate cut topic back on the spot. Such expectations pushed the EUR/USD, which climbed from 1.4380 to 1.4690. Increasing risk aversion was perfectly seen on the quotations of the USD/JPY. Investors, when risk increases, start closing carry trade transactions. This process caused the Japanese Yen to strengthen against the American dollar from 114.50 all the way to 113.10 on Friday. The weakness of the greenback helped the British pound to rebound from the low it reached at 1.9755. The GBP/USD climbed to 1.9950 over the course of the week.

The Polish Złoty experienced big swings against the euro dropping to 3.5975 on Thursday morning in to reach 3.6150 the same day in the afternoon. The EUR/PLN finished the week around 3.6. The Polish currency kept gaining against the weakening USD. Inflationary pressures in Poland keep increasing and another interest rate hike is very possible in January. The USD/PLN tumbled from 2.51 all the way to 2.45.

The future of the American dollar, so important to global markets, is a big question mark. Despite the danger of recession and the decision to cut interest rates, inflation in the US is increasing faster than analysts expected. The question is what the Fed will do? Help the economy or help the USD? The answer to this question we will get to know very soon, when the Fed will have its meeting in January. 

Adam Narczewski