Recent days show that investors want to purchase dollars. Macroeconomic readings are not deterring them at all, even though they should weaken this currency. Inflation in Poland is below 5%, while in Canada it’s falling faster than expected.
Investors want dollars
Tuesday’s data from the USA are hard to describe as good. The NY Empire State Index was published. Instead of the assumed 3.8 points, it recorded -11.9 points. This means that there is a large prevalence of negative responses. If the majority of surveyed managers do not expect an improvement, it is a particularly bad signal for the economy. This, in turn, should worsen the prospects for the dollar. It should, but it does not. For some reason, it continues to strengthen against the euro. This happens even though the chances for further interest rate cuts in the USA are increasing. In this situation, it is necessary to remember that there are more opportunities for correction in the future.
Inflation confirmed
Yesterday’s data on price changes did not surprise the markets. Just like during the initial readings, the consumer price level in Poland is increasing by 4.9%. It is not consistent with the inflation target, which stands at 2.5% with 1% tolerance. It should be remembered that the difference results from excluding anti-inflationary shields. This does not therefore mean that the upward trend will continue. Moreover, a decrease is expected. The current level causes this to be another reason for RPP not to lower interest rates for now. High rates, on the other hand, mean that the Polish zloty is still very strong.
Price change in Canada
Yesterday’s data on inflation in Canada show a clear decrease in the pace of price growth. In September, on an annual basis, they grew by only 1.6%. This is a significant drop compared to 2.0% in August. It is worth noting that this is exactly in line with core inflation, which suggests stability. Additionally, there is an interesting monthly result, showing 0.4% deflation. Last year in Canada – also in September – there was 0.1% deflation. This provides a large space for further reduction of interest rates. Interestingly, the Canadian dollar strengthened after these data, which suggests that analysts no longer expect a faster pace of cuts.
In the macroeconomic data calendar, the following should be noted:
14:00 – Germany – core inflation.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: https://managerplus.pl/rynek-polubil-sie-z-dolarem-33973
