The only significant awaited information came from the U.S with regard to the ever plummeting real estate market. Existing home sales fell in the month of July by 0.2% against an expected decrease by 1%. What has to be mentioned is that markets did not react to this information.

Tuesday was the first day of the of the Monetary Policy Council meeting, where the future of interest rates was to be decided. Analysts predicted that rates would encounter yet another hike by 25 basis points to the level of 4.75%. This is exactly what happened on the following day, strengthening the Zloty against both the Euro and the US Dollar.

Wednesday also witnessed interesting news from the US concerning home prices in the second quarter of the year, which fell by 3.2% which is a record in the 20 year history of the S&P Case-Shiller research. This obviously caused a reaction on the EURUSD market which noted an increase on the day.

Thursday was a calm day on the Polish market with only the second quarter GDP being published.  The GDP noted an increase by 7.6% which was better than expected but markets did not  react.

Friday was the day investors where awaiting where decisive macroeconomic data was to be published. The day started off with less relevant information from the Euro zone and concerned data which did not affect markets, such as the HICP inflation (1.8%), the unemployment rate ( 6.9%) and consumer sentiment ( - 3 points). The day was followed by information from the US market and the Fed’s Chairman Ben Bernake. The data from the US market concerned personal spending (0.4%), personal incomes (0.4%), Core PCE Inflation (0.1%), factory orders (3.7%) with the addition of the Michigan Consumer Sentiment Index and the Chicago PMI which both increased higher than expected. More importantly it has to be underlined that Ben Bernake stated that the Central Bank would try to keep the credit crisis under control, disabling the economy to be hurt as a whole. He also mentioned that “further declines in homebuilding are likely”, but did not actually say what the Fed is planning in the near future and whether there would be a decrease in interest rates. Despite this analysts still believe that the decrease will take place in September. News from the US affected the US Dollar which grew in strength what could be seen on the EURUSD market which is currently quoted at 1.36.

The Polish Zloty is currently quoted at 3.82 against the Euro and at 2.80 against the US Dollar.

Omar Arnaout