The strengthening of the Zloty signals that negative emotions concerned with emerging markets may be coming to a halt, and in the near future investors may expect the further strengthening of the Polish currency. This may be aided by the financial relief plan aimed at the Hungarian economy. What has to also be mentioned is that during the week the Monetary Policy Council (RPP) decided to keep rates unchanged at the level of 6%. Lowering rates by the Council was not possible due the problem of inflation and the weakening Polish Zloty.

As to the US economy then most importantly the Federal Reserve lowered interest rates by 50 basis points to the level of 1%. One more decrease by 50 basis points is possible in December and if it takes place the interest rate level will plummet to the level of 0.5% last seen in 1958.

The US Dollar similarly to the Polish Zloty also encountered a see-saw week, weakening at the beginning and strengthening at the end.

During the next week the Polish Zloty will be dependant on the EURUSD market, where the market is within the support level of 1.2332 and the resistance level of 1.3296. The breaking of any of the two mentioned levels will be the answer to what direction investors could encounter in the upcoming week. 

Omar Arnaout