The last trading day of the year was supposed to be relatively dull, but a lot is happening. Energy commodities are ending the year with a significant markdown. The Swiss franc has strengthened sharply in the home stretch, and in Poland, interest rate cuts are approaching.
Parliamentary finance committee
We need to divide events at the parliamentary finance committee into two categories. On one hand, we have the exchange of courtesies between political opponents, which in many media is content in itself, and more importantly, substantive issues. In substantive speeches, it is worth paying attention to the falling inflation expectations of consumers and entrepreneurs. However, the vice-president of the National Bank of Poland attributed this success to the bank’s communication policy, which many analysts accepted with great surprise. A lower scenario than the one predicted in November is being indicated. The reason given is the further freezing of energy and gas prices. However, we must remember that one day these will have to be adjusted. Considering current market prices, this could have been quite a good moment. The political conflict centered on the fact that one side correctly believes that 6.6% inflation is not a success, the other side points out that it managed to achieve this 6.6% after previously driving it up to 18.4%, so this drop to now is a success. The markets note that the vice president’s statements could be seen as an announcement of accelerated rate cuts.
Surprise in oil
There has been a real downslide of black gold prices for the past two days. The calming situation around the Suez Canal is obviously a significant topic here, but this is happening despite a very large number of readings. Yesterday’s data from the USA showed a decrease of 7.11 million barrels of oil within a week, which is over 1% of the world’s production from that week. Such a big change should inform the market that we have significant shortages. This, in turn, should push prices up. It should, but it doesn’t. What’s more, the number of active drills in the USA is constantly decreasing. This suggests that the market is preparing for declines in the long term. Some analysts suggest that the current drops are also a correction after the optimistic conclusions derived from the announced series of interest rate cuts. Whatever the reason, it seems that oil will end the year cheaper than it seemed just a few days ago.
The silent plight of franc borrowers
Recent changes in the markets make purchasing foreign currencies relatively cheaper. The problem, however, is the Swiss franc. This currency is breaking new records against the euro. December 28 was another day of the strongest franc against the euro since the memorable unleashing of this currency’s exchange rate. Until January 15, 2015, the Swiss Bank intervened in the market to defend its money. That day, however, it decided that this process was too costly and a rapid strengthening of the Swiss currency began, which most franc borrowers remember well. The recent strengthening is not as strong, but nothing encourages settlement with the bank, if it is reasonable, as much as a rapidly appreciating franc.
Today’s economic calendar does not include any major readings.
Maciej Przygórzewski – chief analyst at InternetowyKantor.pl and Walutomat.
