Friday, May 18, 2012

Today's Major Market Move: Polish Zloty Weakens 8% Against US Dollar in May

The same pattern that we've seen previously continues to hold true; when the European crisis-o-meter starts flashing red, the fringe European currencies plummet in value. By 'fringe' we mean the currencies of those countries that sit just outside the edge of the Eurozone, such as Turkey, the Czech Republic, Iceland, Hungary and the topic for today's post, Poland. Since the problems in Greece have returned with a vengeance earlier this month, the Polish Zloty has tumbled 8% against the US Dollar, making it the third worst performing currency over that time frame.

Click here to go to the live table.
The Zloty is getting very close to it's last major pain point which occurred back at the beginning of the year. The USDPLN briefly breached the 3.50 mark before being reigned back in as progress was made on securing the most recent Greek bailout (here is one of our posts during that time frame).

Click here to go to the live chart.
Update: The discussions over the weekend are strongly suggesting that we haven't seen the last of Greek bailouts. Here's some details from the Star:
US President Barack Obama noted [the summit] leaders' agreement that growth and jobs must take precedence over austerity.
As all of the leaders here today agree, growth and jobs must be our top priority, Obama said at the conclusion of the meeting.
The direction the debate has taken recently should give us confidence that Europe is taking significant steps to manage the crisis, he said.
Ahead of the meeting, Obama jettisoned his neutrality, backing French and Italian efforts to rebalance German-led austerity-first policies.
Critics say two years of single-minded focus on debt reduction has fueled rampant unemployment, brought Greece to the verge of bankruptcy and deepened crises in Italy and Spain.
Expect there to be massive pressure to be placed on the ECB over the coming weeks and months to fire up the printing presses. Also expect that the country applying the greatest amount of force to be the U.S. There is an election to be won after all.

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