The question however was, by how much?  The Monetary Policy Council surprised investors by increasing rates by only 25 basis points. This had an influence on the Zloty which noted a decrease against the US Dollar, due to investors expecting a hike by 50 basis points. This does not change the fact that a hike to the level 5.5% during the next year is very probable.

The US economy also received significant information from the ever ailing real estate market, where home prices dropped by 4.5% against an expected decrease by 5% and  new home sales noted an increase by 1.7% against an expected decrease by 2.7%. What is interesting is that the fall in home prices has been the worst in 20 years. Adding to this, it has to be mentioned that consumer confidence published by the Conference Board also noted a decrease to the level of 87.3 points, which is the lowest since 2005.

I believe that the following week will bring the further strengthening of the Zloty, aided by the growth on stock markets and the further growth of investor sentiment, coupled with the weakening of the US Dollar. I believe that the target for the EURUSD market during the next week should be the psychological barrier of 1.50. I have to mention though, that the levels of 1.5080 and 1.5098 are also very probable.

Omar Arnaout