On Wednesday, we’ll see three key decisions about interest rates, one of which will directly impact Poland. Yesterday, the U.S. released disappointing industrial data. The European service sector is showing signs of resilience, but even there, recent reports have fallen short of expectations.
The Monetary Policy Council (RPP) hasn’t changed its opinion
Today, the macroeconomic calendar contains several decisions pertaining to the cost of money worldwide. The first on the list was a decrease in interest rates in Chile, which weakened the local peso. The second decision is to maintain the cost of money at the same level (5.75%), which pertains to Poland. In this case, the decision’s impact on currency exchange rates was negligible, since the market literally lacked voices about any other scenario. Finally, there is the publication from Canada, where the cost of credit changed from 4.50% to 4.25%. Remember, the Bank of Canada began the easing cycle in June. We’ll have to wait until 3:45 p.m for the next, already third, consecutive reduction.
American industry is ailing
Yesterday’s industry indices – PMI at 47.9 pts and ISM at 47.2 pts – did not meet the moderate market expectations. Both were below the consensus, which stood at 48 pts and 47.5 pts, respectively. Thus the forecasts were not “delivered”. Remember, the neutral level is considered to be 50 pts, and anything below signals a recession. Weaker data once again cause concerns about the US economy and its so-called “hard landing”. There is an ongoing debate on the market about the magnitude of the reduction that the FOMC will implement in September. After yesterday’s publications, the likelihood of a double move (a reduction by 50 b.p.) rose to 41%, as pointed out by the FedWatch tool from CME at the time of writing this text. We are entering the last two days of the week, which we will spend with publications from the US job market, and these can really “mess up” the market, thus influencing the fate of the dollar at the end of the week.
Data from Europe
On Thursday, we got to know the PMI indices for services from many EU countries. All of them were above the neutral level, hence the surveyed sector’s situation around the Union is not the worst. The problem is that, in many cases, data did not meet expectations, just like those from the US. Germany’s forecast was 51.4 pts, but it fell to 51.2 pts, and the index for the entire euro area (52.9 pts) rose less than expected (53.3 pts). Publications had no significant impact on eurodollar quotations, which today hover around 1.105 USD. The lack of fluctuations in the world’s primary currency pair has spilled over to most xxxPLN charts, which are also boring. The EUR/PLN rate at 3 p.m. is just under 4.28 PLN, USD/PLN is 3.87 PLN, and we can buy the pound for less than 5.08 PLN. CHF/PLN is an exception, where the złoty is strengthening, bringing the exchange rate to 4.55 PLN.
Author: Dawid Górny, currency analyst at Walutomat.pl
This article “PLN does not react to RPP decisions” first appeared on CEO Magazine.
Source: https://ceo.com.pl/pln-nie-reaguje-na-decyzje-rpp-94879
