Lowest Spreads and Flexible Terms.
The dollar is the strongest it has been in two months after a strong NFP report
Dollar stronger after U.S. data, złoty remains under pressure
After Friday’s data from the U.S. labor market, USD/PLN held near the highs in the morning. On Monday, the dollar cost 3,6846 zł, making it the most expensive since 8 April. For people exchanging money, this simply means a weaker złoty against the U.S. currency.
The impulse came from the nonfarm payrolls report, or NFP. In May, the number of new jobs was twice as high as the median forecast from analysts. Strong revisions to the previous two months were also added to the mix. Such a combination usually lifts expectations for the Fed and supports the dollar.
The market also started to factor in further interest rate hikes in the U.S. more strongly. According to market pricing, the chance of the federal funds rate being raised by at least 25 bp by the end of the year stands at 75%. The next hike is expected in 2027.
Pressure on the złoty was also increased by a rise in risk aversion on global markets. As PKO BP analysts pointed out, the weakening of the Polish currency was mainly driven by external factors, above all the stronger dollar. The EUR/PLN rate was more stable, however, and in the morning the euro cost 4,2461 zł.
Since the beginning of March, EUR/PLN has been stuck in a broad sideways range between 4,2250-4,3070 zł. On Thursday, the market will focus on the ECB (European Central Bank), which is likely to raise rates by 25 bp. In Poland, meanwhile, the Monetary Policy Council has signaled reluctance to quickly reverse March’s rate cut, which in the medium term may not be supportive for the złoty.
CHF/PLN was also little changed. On Monday morning, the Swiss franc cost 4,6239 zł, and since April the pair has been moving in the 4,60-4,66 zł range. The British pound was quoted at 4,9169 zł.
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