Russian drones were shot down over Poland, Israel carried out a bombing raid in Qatar, and Hungary continues to struggle with persistently high inflation.
Violation of Polish Airspace
Yesterday, Russian drones repeatedly violated Polish airspace, a fact confirmed by the Operational Command. The situation in the East has been very tense since yesterday. Due to the concentration of troops near the border as part of Belarusian-Russian military exercises, Poland closed its border crossings with those countries. As is often the case in conflict situations, a diplomat suspected of espionage was also expelled.
Given the scale of the escalation and the wide coverage of the incident in Western media, one might have expected a strong market reaction. The Polish złoty began to depreciate in the morning, but the real drop started just before the stock market opened. The loss of just over 1 grosz is not, by market standards, a dramatic move in response to such a major development. The stock exchange also opened lower, but the decline was still under 1%. Considering the gravity of the events, the market’s muted reaction suggests that reason is still prevailing over emotions—for now.
Inflation in Hungary
Yesterday, new inflation data from Hungary was released. The forecast was 4.3%, and that is exactly what the numbers showed. Why does this matter? This year, Hungary has only once reported a lower figure—4.2% in April. Inflation appears to be stabilizing, but not at a level Hungarians would find comfortable.
Elevated inflation leaves no room for interest rate cuts, and high borrowing costs are weighing on the economy. On the other hand, Hungary’s high interest rates make the forint attractive to investors. Normally, a sluggish economy—growing by just fractions of a percent per year—would deter investment. But with such favorable yields, the forint remains in demand. As a result, since the beginning of the year the Hungarian currency has strengthened 4% against the Polish złoty.
Israel Admits to Attacks in Qatar
Israel also launched strikes yesterday against Hamas members. What makes this incident unusual is the target’s location: the capital of Qatar, Doha. Israel immediately acknowledged responsibility for the operation, stating it had informed the United States in advance. This puts Washington in an uncomfortable position, as both Israel and Qatar are key U.S. allies in the region.
Interestingly, fears of escalation in the Middle East have not yet affected oil markets. Gold, however, has hit new highs—though that has been a common occurrence in recent days. Another consequence has been the strengthening of the U.S. dollar, which has already begun to recover some of its recent losses against the euro. In times of global tension, the dollar continues to serve as a safe haven. Notably, the Swiss franc has so far shown little reaction.
Key Macroeconomic Events to Watch Today
- 13:45 – Switzerland – Speech by the central bank governor
- 14:30 – United States – Producer price inflation (PPI)
Author: Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: CEO.com.pl
