Markets never sleep and never rest. They’re all time influenced by all these tightening, hawks and doves. COVID has impacted all of us two years ago and some countries are still fighting consequences of the crisis. Over a month ago we have started another part of history which hasn’t been full of warfare and we may say conflicts “like” this one between Russia and Ukraine.
Charts: courtesy of TradingView.com
Measures to fight crisis and inflation
Rising prices of the most important commodities like crude oil, nickel, wheat, gas and many, many more triggered national banks to fight inflation. Many banks around the world have become hawkish like never before. All of major banks raised their interest rates.
Bank of England, Fed ECB – they all decided to tighten monetary policy or apply hawkish rhetoric as proper departments of i.a. the USA and the EU imposed sanctions on Russia what obviously pulled the prices to very high levels or even ATHs.
Duels of currencies – Greenback “stronger than ever”?
We have followed recent events around the world. Yesterday’s FOMC Meeting Minutes, National Bank of Poland’s interest rate decision and today’s ECB Meeting Minutes are shaping the markets at the moment. Dollar Index shows an impressive performance of USD. DXY has gained over 7% over last year. However, EUR/USD and GBP/USD pairs show other currencies are fine too.
USDPLN (5D) – Zloty, do something!
Every currency is or is going to be supported by proper institutions and there are serious duels coming. Unfortunately not every currency is so ‘open’ for monetary policy tightening. Even a 100bps raise of the NBP’s interest rate hasn’t helped zloty to keep its rate on a proper level.
As we see on the chart fluctuations are there and zloty showed a “sample” of its abilities…, but it was like time-limited demo version. Dollar feels really well this time, next rate hikes are expected and situation in the eastern Europe keeps influencing PLN.
Let’s have a look at other forex pairs. British pound has strengthened recently – look at this slightly smooth slide!
GBPUSD (5D) – Never Ending Duels (-0.6%)
EURUSD (5D) – Two strong currencies (-1.5%)
Charts: Courtesy of TradingView.com