Despite the optimism of last week regarding a further drop in crude oil prices, we’re having to reconcile with yet another rebound. The core inflation rate in Poland is as expected at 7.3%. In Argentina, despite massive devaluation, the black market exchange rate significantly differs from the official one.
Core Inflation without Surprises
After we got the final inflation data last Friday, many analysts began to wonder if the forecast for the core inflation wasn’t too optimistic. It turned out it wasn’t and the indicator was exactly 7.3%, a decline from 8% a month ago. Core inflation is an important indicator, showing some long-term trend. It is an indicator unaffected by energy and food prices. This year, we have a situation where energy prices are clearly dropping. Crude oil has lost about 10% since the beginning of the year, and gas is currently over half cheaper. On the other hand, the forecast for the increase in food prices for this year is 15% up. Considering that the trend of falling commodity prices has a high chance of not lasting, especially in the case of gas, we can expect that the climate for interest rate cuts will not be so good. This, in turn, is a good omen for those interested in foreign trips but disastrous for those with złoty loans.
Rebound in Oil Prices
Just a week ago, oil was attacking the lows of March, May and June in the 70-72 dollar range. However, yesterday the prices reached almost 80 dollars per barrel. Of course, we are talking about Brent oil listed in London. American WTI oil has a similar characteristic, only it’s roughly 5 dollars cheaper. Many analysts point to attacks on commercial ships in the Red Sea, heading towards the Suez Canal as the reason. The region was not entirely safe before, but the dense threat is best evidenced by the fact that the USA has already managed to construct an international coalition with Britain, Canada, France, Bahrain, Norway and Spain to protect ships in the region. Once again it turns out that where there is big money, the world responds much more efficiently to such attaks.
Confusion with Argentine Peso
Last week we witnessed the devaluation of the Argentine currency. It wasn’t however a symbolic change. On December 13, the market closed at a rate of 366 pesos per dollar, and on the 14th it opened at a rate of 800 pesos. The reason for such a radical change was an attempt to catch the official exchange rate with the market exchange rate. The problem is that the official dollar price when buying with pesos is as high as 975. This means that the currency is still 20% weaker than the official exchange rate. The new government is currently making a lot of bold moves, but looking at the behavior of the currency, dollarization we were warned about may appear sooner than we thought.
Today in the macroeconomic data calendar, it is worth paying attention to:
2:00 PM – Hungary – interest rate decision,
2:30 PM – Canada – consumer inflation,
2:30 PM – USA – housing starts.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl and Walutomat.
