Market summary according to AFORTI: government swearing in, "new" chairman of the Polish Financial Supervision Authority, PLN strong against USD

The last week still does not bring clarity and expectations for changes on the Polish political scene and the formation of a government that will have the support of the parliamentary majority. On Monday, November 27, at 4:30 p.m., the composition of Prime Minister Morawiecki's new government and its swearing-in are expected. Despite previous assurances, analysts do not believe in the success of this mission and in obtaining the support of at least 231 MPs. So far, despite the invitation, none of the parties that got into the Sejm has expressed interest in conducting coalition talks. The next scenario is therefore a 14-day period to convince the Parliament, which, in the light of the coalition agreement of the opposition parties, will mean the failure of the mission and the procedure for appointing a new government by the Sejm. This will take place on December 11, 2023, and as Marshal Hołownia announces - the meeting will not be closed without the election of a new government. According to the provisions of the Constitution, the swearing-in of the new government by the President should take place "immediately". Without a specific date, we can assume that it will be December 13. A later swearing-in will mean that at the EU summit on December 13-14, Poland will be represented not by an appointed but sworn-in government, but by a government that did not obtain a majority in the Sejm. For Poland, this obviously means difficulties in obtaining EU funds. So far, we have obtained a declaration of an advance payment in the amount of EUR 5 billion, which is to be allocated mainly to energy projects.

Another important event in the field of politics and finance was the appointment of Jacek Jastrzębski for another term - as the chairman of the Polish Financial Supervision Authority. Opposition parties requested to refrain from this nomination - however, on November 24, the President of the Prime Minister decided to make this move.

Good economic data flowed from Poland, mainly data on growing consumption and wages. This overlapped with the still not very good data from the EUR zone. As a result, the Polish zloty gained, stopping its strengthening at around 4.3400, and then corrected to around EUR/PLN 4.3600-4.3800. This was in line with our expectations and last week's forecasts. In our opinion, the zloty will gravitate towards strong support at 4.3000, but range trading at 4.3350-4.3750 is more likely for the time being. The current strengthening of the Polish currency has clearly attracted importers who have suspended their purchases for a long time - waiting for the return of purchasing levels that will be consistent with their expectations. It should also be borne in mind that the holiday season is associated with increased consumer purchases, which are largely made abroad. This may significantly offset the pressure on the strengthening of the Polish zloty.

EUR/PLN over the last 7 days

EUR/PLN over the last 30 days

Looking at the American currency, the dollar weakened very much in relation to the Polish currency and broke the psychological level of USD/PLN 4.0000. Such movements in the American currency were, of course, influenced by changes in EUR/USD, where the dollar was losing against the EUR. Data from the United States had a strong impact on the valuation of the American currency and currently it is not expected that the dollar will appreciate against the zloty above USD/PLN 4.04. Our assessment is to test the USD/PLN support around 3.9900 and the range of 3.9750-4.0200.

USD/PLN over the last 7 days

USD/PLN over the last 30 days

Let's look at what happened on international markets. First of all, we had a shorter week in the USA - because November 23 was Thanksgiving and American financial institutions had a day off. The information that the cycle of interest rate increases had ended caused the dollar to lose against the EUR - at times reaching towards EUR/USD 1.1000. These announcements show that economic development in the US is gaining momentum, and the inflation targets expected by the Fed are moving in the expected direction.

EUR/USD over the last 30 days

Looking at the international situation, it seems that the situation related to the conflict in the Middle East has ceased to have an impact on markets and prices of raw materials - especially oil. The market concluded that the conflict would not expand beyond the Gaza Strip and would not spread to the region. The price of BRENT crude oil, after falling to around USD 77, consolidated around USD 81 per barrel, showing that the market is stabilizing. The upcoming holidays will certainly mean an increased demand for oil. In our opinion, the level of USD 80/barrel will remain strong support.

BRENT crude oil – last month USD/barrel

Gold – still consolidating around the level of USD 2,000/ounce. The lack of greater volatility may result from returns to stock markets and greater interest in riskier assets with higher rates of return.

Finally, a short look at the stock markets. There was exceptional optimism on the Warsaw Stock Exchange. Investors made record purchases, both directly and through equity funds. On WIG20, the level of 2,200 above was maintained - reaching almost 2,240 points.

On WIG we saw record levels above 75,200, achieving an increase of over 30% since the beginning of the year. Will the increased risk appetite continue? We can probably count on further funds flowing to the stock exchange in the short term, but we should also bear in mind that after such increases, profits may be realized.

Szymon Jańczak

Director of the Treasury Department
AFORTI Exchange S.A.