Passing a budget, considering the timing of the new government’s inauguration, is definitely a sprint. Therefore, one can expect an amendment to appear next year. For now, markets are accepting this calmly, despite the deficit.
A Gigantic Deficit Budget
Next year’s budget plan currently appears to be rather elastic. It’s important to remember that there was little time for its preparation, although it was known from at least October 15th who would form the government. On the other hand, the President’s signature is required, so this document must meet many demands, and these demands are not always cheap. Considering the state’s borrowing requirements, it is quite surprising that the yield on 10-year bonds has been falling in recent weeks. The current level around 5% is the lowest since the end of the first quarter of 2022. This shows a strong interest from investors in investing in Poland.
Weak Dollar Supports the Zloty
Yesterday’s weaker data from the US resulted in capital fleeing once more to Europe. This is due to GDP results being lower than expected. This can be clearly seen by the next attack on the EURUSD pair at the level of 1.10. The more capital flows into the eurozone, the more it also flows into the neighbouring economies. This flow was one of the reasons for the strengthening of the Polish currency on Thursday. The Hungarian forint reacted similarly. Usually, the Czech crown is also in this set, but here it should be remembered that the weakening of the dollar coincided with the decision of their central bank, which had a stronger impact on the markets.
Czechs Lower Interest Rates
Yesterday, the first rate cut in this cycle took place in the Czech Republic. The decision was extremely cautious, with a cut of just 0.25%. As a result, the main interest rate is now 6.75% and is a full percentage point higher than in Poland. This is currently the third highest result in the European Union. Only Hungary (10.75%) and Romania (7%) have higher interest rates. It is precisely because of interest rate cuts that the Czech crown, despite the inflow of capital into Europe, was in retreat yesterday. Given that the Czechs are apparently in a cycle of cuts, the prospects for the Czech crown are currently not looking the best.
Today in the macroeconomic data calendar, attention should be paid to:
14:30 – USA – American’s expenditure,
14:30 – USA – American’s income,
14:30 – USA – orders for goods.
Maciej Przygórzewski – chief analyst at InternetowyKantor.pl and Walutomat
