EURUSD broke support near 1.14
The national reading of June's unemployment rate had no noticeable impact on the zloty's trading, which remained under the dominant influence of impulses coming from the Middle East. Escalation of tensions was contributed to by Houthi rebel attacks on two Saudi tankers in the Red Sea, after which Brent oil prices rose above $100/b for the first time since May. The accompanying rise in risk aversion increased demand for the dollar as a safe haven, leading to its strengthening in the broader market. As a result, the EURUSD rate broke support near 1.14.
The decline in the pair's trading was not stopped by the message from the ECB meeting, during which the bank left an open space for rate hikes later in the year if inflationary pressure persisted or second‑round effects appeared. In an adverse external environment, the zloty behaved relatively stable against the euro, deepening the recent over‑valuation against the dollar.
USD/PLN rate – forecast for the coming days
On Friday, market participants will be drawn by preliminary July PMI readings for industry and services in Europe and the USA. Their impact on the currency pairs we monitor may remain limited, as investors will continue to focus on Middle East news and rising energy commodity prices.
In the absence of credible de‑escalation signals, the EURPLN may rise to the 4.34–4.35 range by the end of the week, while USDPLN could set a new yearly high above 3.81.
Domestic interest rate market
On Thursday, the domestic interest rate market saw a sharp rise in bond yields. The yield curve moved up by more than 15 basis points. Such a deep discount was the result of rising oil prices – Brent prices crossed the psychological 100 $ / b barrier – and the ECB signalling the possibility of a rate hike at the September meeting.
Despite the clear rise in yields, the nearest significant technical resistance levels remain relatively far, opening space for further price increases of up to about 30 basis points. For 10‑year bonds, the key zone is around 6.0‑6.1 %.
Sentiment is not improved by US and Iranian statements indicating the risk of further escalation of the Middle East conflict in the coming days. In the context of a worsening global debt market, it is worth noting Thursday's local bond auction. The auction results confirmed solid demand for Polish treasury securities despite an uncertain market environment.
The Ministry of Finance sold bonds worth 11.3 bn PLN, and in the supplementary auction for another 0.4 bn PLN. In our assessment, moderate demand indicates that investors are waiting for geopolitical tensions to calm, despite increasingly attractive yield levels.
During Friday's session, the impact on instrument valuations may also come from preliminary July PMI releases for the euro zone and the USA.
Investors will likely analyze the data for the impact of geopolitical tensions on economic activity. However, it is difficult to expect them to become a catalyst for a significant change in sentiment in global financial markets.
