Market Summary by AFORTI: Situation on the Capital and Financial Markets in the First Week of June 2024
Summary of the Week:
The first week of June 2024 brought several important macroeconomic events that significantly influenced financial markets. The most important events were central bank decisions and the publication of key economic indicators from Poland and abroad.
Poland
Inflation and MPC Policy
The Central Statistical Office reported that CPI inflation for May 2024 was 2.5% year-on-year, better than the expected 2.7-2.8%. Month-on-month inflation was 0.1%. This fall in inflation is a result of the change in the VAT rate on food and the end of the energy price shield programmes at the end of June 2024. The Monetary Policy Council decided to leave interest rates unchanged, which was in line with market expectations.
Economic situation
The government has announced the continuation of support in the form of energy vouchers, but the details of the programme have not yet been formally announced. Decisions on this should be made within the next 10 days. In addition, PMIs for industry and services indicated a slight increase in economic activity, which is a positive sign for the economy.
Exchange rates
EUR/PLN
The beginning of the week was characterised by a stabilisation in the range of 4.2500-4.2700. Wednesday brought a sharp weakening of the zloty to 4.2840, and the week ended at 4.2790. The increase was a result of the publication of inflation data in the euro area and the MPC's decision to leave interest rates unchanged.
EUR/PLN - perspective of the last 7 days
USD/PLN
The zloty started the week in the 3.9050-3.9250 corridor. On Wednesday, the exchange rate rose to 3.9650 and reached 3.9770 on Thursday, eventually closing the week at 3.9400. The increase in volatility was driven by the publication of macroeconomic data from the United States, including the non-farm employment report (NFP), which surprised analysts with a better result.
USD/PLN - perspective of the last 7 days
EUR/USD
The EUR/USD fluctuated between 1.0790 and 1.0885, maintaining consolidation around the 1.0850 level. The exchange rate reacted to differences in inflation data between the euro area and the US, as well as to announcements of further action by the European Central Bank in the context of monetary policy.
EUR/USD in the perspective of the last 7 days
Situation on the Commodities Market
BRENT crude oil
The price of Brent crude oil in the first week of June moved in a range of USD 82.00-87.00 per barrel. The oil market was influenced by geopolitical tensions and reports on US crude inventories. At the end of the week, the price was around USD 80.97 per barrel.
BRENT crude oil - last 7 days USD/barrel
Gold
Gold quotations oscillated around the USD 1950-2000 per ounce level. As a traditional safe haven, gold was gaining in value in response to increasing uncertainty in financial markets and concerns about global inflation. The value of gold at the end of the week was around US$2047.70 per ounce.
Gold - last 7 days USD/ounce
Equity market
WIG
The Warsaw Stock Exchange's main index lost around 1,000 points from the previous week, ending the week at 88,000 points. The declines came as no surprise to the market and the 90,000 point level remains an expected support in the short term. The correction was the result of investors taking profits and a general decline in market optimism in the face of mixed macroeconomic data.
Currency forecasts
Short-term
- EUR/PLN: Expected range of 4.2400-4.2900.
- USD/PLN: Expected range of 3.9000-3.9600.
Medium-term
- EUR/PLN: Possible drop to 4.2300 over the next month.
- USD/PLN: Stabilisation in the range of 3.8800-3.9400.
Technical analysis
EUR/PLN
- Support level: 4,2400
- Resistance level: 4,2800
USD/PLN
- Support level: 3,9000
- Resistance level: 3,9600
Expert commentary
Experts indicate that the current downward trend in the foreign exchange market may be short-lived, with the possibility of a rebound in the second half of the month. SME companies are advised to monitor macroeconomic data releases and use currency hedging tools.
Events for the coming week
- 12 June 2024: Publication of the US CPI. Publication of inflation data in the euro area.
- 14 June 2024: Bank of England and US Fed decision on interest rates.
- 15 June 2024: Industrial production data in Poland.
Sources
- NBP - Inflation Report
- NBP - Financial Stability Report
- Bloomberg - Market Analysis
- Money.pl - Financial News
- Investing.com - EUR/PLN
- Investing.com - USD/PLN
- Investing.com - EUR/USD
- Investing.com - BRENT crude oil
- Investing.com - Gold
- Investing.com - WIG