The Monday session brought consolidation to the US stock market and a dynamic rebound of indices on the Warsaw Stock Exchange (GPW). The Polish zloty gained several groszy against the euro and the US dollar. Gold approached its all-time highs. The market awaits tomorrow’s CPI report from the United States. Speculation is increasing that the data will provide the Federal Reserve with further arguments for more significant easing of monetary conditions at its next meeting in September. The dollar has not changed its valuation and yields on US bonds have fallen. Geopolitical risk in the Middle East remains high.
The dynamic rebound on the GPW contrasted with the consolidation of the German Dax and the US benchmarks. The WIG20 closed the day with a result of 3.42 percent and the broad WIG grew by 3.05 percent. Accordingly, the former covered last week’s downward gap, which is a positive technical signal. At the moment, the low on 2200 points is the end of the correction for now. It’s worth noting that the summer declines are very similar in size to the discount that occurred from August to October. Also, the low of the past week was at a similar level as the lows of January 2024 and the peak from the July-August 2023 turn. Therefore, we have a fairly strong barrier around the area of 2180-2200 points which has so far protected the index from a larger discount. However, the index is still below the uptrend line that links the lows of October 2022 and 2023.
The demand for shares on the GPW should be sought in the strength of the Polish zloty. The EUR/PLN exchange rate fell below 4.30 this morning, while on Friday the rate set a local peak at 4.33, the highest since early July. The EUR/USD rate was consolidating and was hovering around the level close to 1.0920. The volatility of the major currency pair is extremely low but is likely to increase today with the publication of the US PPI inflation and certainly more will happen tomorrow during the CPI report publication. A positive surprise in the level of producer price dynamics may suggest that the situation with consumer prices could look similar. The PPI is expected to decrease from 2.6 percent year-on-year in June to 2.23 percent year-on-year in July as anticipated.
Geopolitical risk in the Middle East remains high. White House spokesperson John Kirby said the United States believes that an Iranian attack on Israel has become even more likely and could happen as early as this week.
Crude oil gained yesterday, which could be due to the factor described above. A barrel of WTI reached the threshold of 80 USD and Brent approached 82.5 USD. OPEC has lowered its forecasts for the growth of global oil demand this year by 135,000 barrels a day, citing lower demand from China. The cartel still expects growth of 2.1 million barrels a day, which is higher than typical pre-pandemic levels. It is also higher than the forecasts of the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) at about 1-1.2 million.
– Łukasz Zembik, Oanda TMS Brokers
Source: https://ceo.com.pl/dynamiczne-odbicie-na-gpw-zloty-zyskuje-przed-raportem-cpi-z-usa-70677
