Trump's Declaration
The US president extended the ceasefire indefinitely, even though no further talks with Iran took place in Islamabad. Additionally, Trump announced the maintenance of the blockade in the Strait of Hormuz.
In this situation Tehran refuses to sit down for peace talks. Iranians claim that the Americans will soon lift the blockade of the strategic waterway. Only then will their envoys be ready to meet in Pakistan.
This reinforces my conviction that the standoffs between the parties will last for weeks (if not months). None of the promises made will be taken seriously by the markets until they are fulfilled and maintained for longer than a few days. Investor mistrust is confirmed, for example, by oil prices, which after the president's declaration do not want to fall permanently.
Despite a literally temporary discount of US dollar prices below 88 USD per barrel, by Wednesday afternoon we see a return to levels above 90 USD. The reflection of the main world currency pair remains unchanged, where gains are effectively halted by resistance at 1.175 USD.
Who trusts Warsaw's words?
The issue of trust remains equally important regarding yesterday's hearing of the Federal Reserve candidate before the Senate. The market did receive a lot of information it wanted to hear, but some answers were evasive.
The most important issue, namely the assurance of FED autonomy, was upheld. The question, however, is whether anyone expected a different declaration than the one that can be summarized in words: the central bank's independence will be preserved, and decisions will be based on hard macroeconomic data.
In this regard, concerns may arise from evasive answers about interest rate cuts. During the hearing, Kevin Warsh also presented several other opinions and ideas: a gradual reduction of the Federal Reserve's current balance sheet, a desire to replace forward guidance publications (FED communications about future monetary policy) with internal FOMC debates, and he again expressed his support for the development of the artificial intelligence industry.
Does the market trust Kevin? Looking at the FED Watch Tool, which at the time of writing still indicates no rate cuts until the end of the year, and the strong dollar – one can conclude that it does.
PLN dislikes chaos
The endless conflict in the Middle East and the strong dollar are a combination that weighs on the national currency during the Wednesday session.
The PLN is under pressure from external factors, causing the main currencies to rise against the zloty.
The EUR/PLN rate at 14:00 is expected to reach 4.25 PLN, CHF/PLN is near 4.63, and USD/PLN just touched 3.62 PLN.
The national currency also weakens against the pound, which on Wednesday is supported by inflation data from the Islands.
GBP rate - forecasts for the coming days
According to the latest publications, British producers' prices rose in March by 2.6% year‑over‑year (previously 1.8% y/y), and consumer inflation reached 3.3% y/y (previously 3% y/y).
Higher readings are an argument for restrictive monetary policy, opening the discussion even about possible interest rate hikes.
The strong pound today strengthens in the foreign exchange market, so the GBP/PLN rate is keenly looking toward 4.89 PLN.
