The month of August brought a further acceleration in the pace of price hikes. Data from the US has allowed the dollar to close the week with another increase, thus making up for losses. Meanwhile, Germany has shown the yellow card to the current political parties.
Inflation Continues to Rise
Analysts had expected that consumer inflation in Poland in August would remain at an unchanged level of 4.2%. However, it turned out that we had an increase and prices are currently rising by 4.3% annually. Given the declarations of members of the Monetary Policy Council, we should not expect changes in interest rates in the coming months. As a result, even though prices are rising faster than expected, there is not a significant reaction in the currency market. The euro rate was reasonably stable. On the other hand, the dollar rose slightly on Friday. This was more due to global market events rather than the condition of the Polish zloty.
Data from the USA
On Friday, we received a larger set of data from across the ocean. It started with spending and income of Americans. Spending is increasing by 0.5% on a monthly basis, and income by 0.3%. These are not parameters that indicate further reductions in inflation. As a result, it was a signal that reinforced the dollar. The stock exchange indices data was also better. The Chicago PMI Index and the University of Michigan Index performed well. As a result, we had another good day for the dollar. The week ended with a significant strengthening of this currency after the recent declines. On Monday, one euro was worth 1.1200 dollars, by Friday it had dropped to 1.1050.
State Parliament Elections (Landtag)
In theory, Landtag elections are not important enough to affect the currency market. However, they show an important change taking place in German politics. The past few years have shown us that the growing popularity of parties considered radical has resulted in previous ruling parties in Germany receiving less support. That mean more parties need to be in the coalition. This is a result of the current government Chancellor Scholz having such wide range of factions. The weekend elections proved that the problems of main parties will only escalate. Currently, with the emergence of a third controversial party – the so-called BSW, or the Sahra Wagenknecht Alliance – the situation is getting much harder. In Thuringia, four parties that had alternated in governing Germany received a total of 34%, with two formations not exceeding the election threshold. In Saxony, it seems that the CDU, SPD and the Greens may have a chance to form a majority. What does it mean for markets? We are likely facing immense confusion after the upcoming Bundestag elections.
Today in the macroeconomic data calendar, it is worth noting the readings of the PMI indices for industry.
Maciej Przygórzewski – chief analyst at InternetowyKantor.pl
Source: https://managerplus.pl/ceny-rosna-jeszcze-szybciej-niz-w-lipcu-43983
