Recently, there has been more discussion in the markets about the economic deceleration being experienced by different economies, rather than about the rise in prices. The risk of increased unemployment is a significantly more serious problem. Today’s PMI indices will show us what the expectations are.
Landscape after the FED decision
Secondary shocks continue to be seen in the market after the recent meeting of the Federal Reserve. However, investors increasingly conclude that interest rate cuts should be expected, not so much due to decreasing inflation but due to slowing economic activity. This is why expectations for rate cuts are increasing. By the end of the year, analysts see room for three, or even four more reductions across the ocean. This is noticeable in other markets. Stock exchanges remain high, but the main beneficiaries are other instruments that do not pay interest. For instance, gold, which recently broke a new price record. In this entire arrangement, the Polish zloty is still performing exceptionally well.
Positive data from Canada
Last Friday, we learned two important readings from Canada. At 14:30, we received results about producer inflation and retail sales. Producer price growth – as suspected – is not growth, but rather a decline, which is higher than expected. Producer prices have dropped by as much as 0.8% over the year. They didn’t just slow down, they dropped. Along with this, retail sales have grown by 0.9%. A sub-index is also being published without cars, but it has increased by only 0.4%. This shows that Canadians are looking more favourably at buying cars. After the data was published, the Canadian dollar temporarily showed an increased volatility, after which it almost returned to the point before the announcement.
Moody’s does not change Poland’s rating
After recent reports on how flexible the budget of our country has turned out to be, many observers have started to fear additional negative effects. The fact that we will have to pay interest on current expenditures is one thing. Another is the creditworthiness of our country. If this were to decrease, it would quickly turn out that the costs of servicing the debt could increase. However, Friday’s decision by the rating agency Moody’s was very reassuring. The agency points out that the growing debt of our country will be balanced by solid prospects for economic growth. Interestingly, the report indicates that improvements in the judiciary are expected the soonest in 2025 due to the conflict between the government and the president. The lack of negative signals is news that allows the zloty to maintain its recent high value over a longer period.
Today, in the calendar of macroeconomic data, it’s worth paying attention to the publication of PMI indices.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: https://ceo.com.pl/oczekiwania-wobec-obnizek-stop-procentowych-rosna-a-polski-zloty-pozostaje-silny-84480
