The dollar weakens, the zloty strengthens. "The balance of the weekend is unfavorable for Iran"

Despite the intense exchange of fire in the Middle East the ongoing weekend between Israel and Iran financial markets, including the currency market show a decrease in risk aversion on Monday morning. The franc is getting cheaper Swiss franc and gold. The dollar is losing value against the zloty and the euro.

Late Friday evening, Iran fired a series of missiles ballistic missiles towards Israel in retaliation for an earlier Israeli attack on targets related to Iran's nuclear program . Exchanges of fire continued throughout the weekend, but the escalation of the conflict was not treated with exaggeration by the financial markets excitement. Suffice it to say that the TA-35 index, grouping the largest Israeli companies from the Tel Aviv Stock Exchange, despite the bombing of the country, gained during the session on Sunday 0.47 percent and is growing by almost 1 percent on Monday morning. At the start gold also lost about 0.5 percent in the new week. However, oil continued to gain as the raw material whose price is most affected conflict in the Middle East.

The decline in risk aversion was visible on the currency market, where the złoty managed to make up for some of the losses from the end of last week. EUR/PLN exchange rate At 10:15 it lost over 0.1 percent and was at the level of 4.2607 PLN. This is over 1.5 PLN lower than Friday's maximum, caused by events in the Persian Gulf. Increased volatility on the euro-zloty pair is playing out however, for several weeks it has been in the range of 4.20-4.30 PLN.

"In line with our suspicions this morning, Tehran has proven was unable to respond effectively and was carried out with the help of missiles ballistic missiles and drones, the retaliation did not cause any major damage, both during the first hours and the rest of the weekend," he wrote in a morning comment Kamil Cisowski from DI Xelion, summing up that the balance of the weekend is unfavorable for Iran, which means a decrease in risk.

Investors seem to be assessing that the conflict between Israel and Iran will not have a significant impact on financial markets. On Sunday, US President Donald Trump said he thinks there is a good chance that an agreement between Israel and Iran will be reached.

The decrease in risk was also reflected in the quotations of other traditional safe havens. Apart from gold, the Swiss franc lost ground, which was paired with The euro fell from over 1.074 on Friday to 1.063 on Monday. In tandem with The dollar also fell from almost 14-year highs. The CHF/PLN exchange rate weakened on Monday to PLN 4.5289 on Monday at 10:30, although it was still reaching PLN 4.5289 on Friday. almost 4.58 PLN.

The dollar was weak, losing value against the Polish zloty on Monday in the morning over 0.41 percent and was quoted at PLN 3.6785. The rate was heading towards last week's minimums at the level of PLN 3.6691, which was the lowest exchange rate of the American currency in pair with the zloty for four years. The eurodollar gained 0.3 percent on Monday morning and was quoted at 1.1582, which is only 45 pips from Thursday's maximum, which was also the highest rate on EUR/USD pair from autumn 2021

"This week we should expect a significantly increased volatility on currency markets, which will be related to Wednesday's the Fed meeting, as well as the dynamic situation in global politics. An important The risk remains the escalation of the conflict between Israel and Iran," Credit Agricole analysts write in weekly report.

"Financial markets almost unanimously assume that the Reserve The Fed will not change interest rates at its Wednesday meeting. Key however, there will be a new projection of the interest rate path – the so-called "dot plot". Back in March, the median scenario assumed two rate cuts in 2025, but Currently, there is talk of one downward move this year," analysts wrote Oanda TMS Brokers.

MK

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