Better than expected readings were reported from existing homes sales, consumer confidence, core durable good orders and the Chigaco PMI. This together with the worse than expected reading of the German IFO Business Climate Index, which has been in a decrease for three straight months, caused the EURUSD market to fall as low as 1.4570. I believe that the decrease movement on the EURUSD market will continue, with the first possible support levels being 1.4355, 1.4219 and 1.400. The first two are more probable as they represent the 38.2% and 41.4% retracement of the increase movement initiated at the end of 2005.  What has to be also mentioned is that the FOMC minutes were published, where the Federal Reserve underlined the need to increase rates in the near future in order to help solve the problem of inflation. This may not be necessary though, if the prices of commodities continue to decrease.

As to the Polish market then better than expected data was published with regard to retail sales which increased by 14.3% y/y against an expected increase by 14%, the unemployment rate which increased to the level of 9.5% and the GDP in the 2 quarter of the year which increased by 5.8% against an expected increase by 5.6%. This though did not have much of an influence on the Polish zloty which weakened in strength against both the US Dollar and the EURO. Additionally, the Monetary Policy Council, as expected left rates unchanged at the level of 6%, but one more increase is still planned during the year.

Omar Arnaout