Market Summary by AFORTI: Crash on the precious metals market, US interest rates unchanged and appointment of new Fed chair, EU-India agreement

Last week, the key events were the crash on the precious metals market after record increases, the appointment of Kevin Warsh as the new head of the FED, and the landmark EU-India trade agreement. In the asset markets, the WIG index and oil prices rose, while gold, Bitcoin and technology stocks fell; at the same time, the zloty lost value against the euro and began to lose ground against the dollar in response to a global increase in risk aversion. In the coming week, investors' attention will focus on the interest rate decisions of the Monetary Policy Council, the ECB and the Bank of England, as well as the US labour market report (NFP).

Economic indicators

Poland

1. Retail sales (y/y) (Dec): value: 5.0%; forecast: 5.5%; previous: 2.8%

2. M3 money supply (y/y) (Dec): value: 10.4%; forecast: 10.4%; previous: 10.6%

3. Car registrations (m/m) (Dec): actual: 38.30%; previous: -7.00%

4. Car registrations (y/y) (Dec): actual: 21.70%; previous: -0.30%

5. Unemployment rate (Dec): actual: 5.7%; forecast: 5.7%; previous: 5.6%

6. GDP (y/y): actual: 3.6%; forecast: 3.6%; previous: 3.0%

Eurozone

1. GDP (y/y) (Q4): value: 1.3%; forecast: 1.2%; previous: 1.4%

2. GDP (q/q) (Q4): value: 0.3%; forecast: 0.2%; previous: 0.3%

3. Unemployment rate (Dec): actual: 6.2%; forecast: 6.3%; previous: 6.3%

4. M3 money supply (y/y) (Dec): actual: 2.8%; forecast: 3.0%; previous: 3.0%

5. Private loans (y/y) (Dec): value: 3.0%; forecast: 2.9%; previous: 2.9%

6. Consumer confidence index (Jan): value: -12.4; forecast: -12.4; previous: -13.1

Germany

1. CPI in Germany (y/y) (Jan): value: 2.1%; forecast: 2.0%; previous: 1.8%

2. Ifo business climate index in Germany (Jan): value: 87.6; forecast: 88.3; previous: 87.6

3. Current analysis of the situation in Germany (Jan): value: 85.7; previous: 85.6

4. Unemployment rate in Germany (Jan): actual: 6.3%; forecast: 6.3%; previous: 6.3%

5. German GDP (y/y) (Q4): actual: 0.4%; forecast: 0.3%; previous: 0.3%

6. German GDP (q/q) (Q4): value: 0.3%; forecast: 0.2%; previous: 0.0%

France

1. French GDP (y/y) (Q4): value: 1.1%; forecast: 1.2%; previous: 0.9%

2. France GDP (q/q) (Q4): actual: 0.2%; forecast: 0.2%; previous: 0.5%

3. France consumer spending (m/m) (Dec): actual: -0.6%; forecast: -0.4%; previous: -0.3%

4. Consumer confidence index in France (Jan): value: 90; forecast: 90; previous: 90

5. Car registrations in France (m/m) (Dec): value: 30.1%; previous: -4.7%

6. PPI (y/y) (Dec): value: -2.00%; previous: -1.50%

United Kingdom

1. Mortgage applications approved (Dec): value: 61.01K; forecast: 65.00K; previous: 64.07K

2. Mortgage lending (Dec): value: 4.60B; forecast: 4.50B; previous: 4.59B

3. BoE consumer credit (Dec): value: 1.524B; forecast: 1.700B; previous: 2.143B

4. BRC Shop Price Index (YoY): value: 1.5%; forecast: 0.7%; previous: 0.7%

5. M4 money supply (MoM) (Dec): value: 0.3%; forecast: 0.3%; previous: 0.8%

6. M3 money supply (Dec): value: 3212.7B; previous: 3202.0B

USA

1. Interest rate decision: value: 3.75%; forecast: 3.75%; previous: 3.75%

2. Conference Board Consumer Confidence Index (Jan): value: 84.5; forecast: 90.6; previous: 94.2

3. PPI (y/y) (Dec): value: 3.0%; forecast: 2.7%; previous: 3.0%

4. PPI (m/m) (Dec): value: 0.5%; forecast: 0.2%; previous: 0.2%

5. Chicago PMI index (Jan): value: 54.0; forecast: 43.5; previous: 42.7

6. Initial jobless claims: value: 209K; forecast: 206K; previous: 210K

7. Trade balance (Nov): value: -56.80B; forecast: -43.40B; previous: -29.20B

8. Durable goods orders (m/m) (Nov): value: 5.3%; forecast: 3.1%; previous: -2.1%

9. Core durable goods orders (m/m) (Nov): value: 0.5%; forecast: 0.3%; previous: 0.2%

10. Crude oil inventories: value: -2.295M; forecast: -0.200M; previous: 3.602M

China

1. Industrial profit in China, YTD (Dec): value: 0.6%; previous: 0.1%

Currency market

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.13%. The euro price fluctuated between 4.1944 and 4.2166.  

Similarly, the dollar (USD) weakened against the zloty (PLN) by 0.12%. The price of the dollar fluctuated between 3.4831 and 3.5652.  

Oil and gold market

The price of BRENT crude oil rose by 5.47%. The price fluctuated between 64.28 and 70.51 USD/barrel.  

Gold, on the other hand, ultimately fell by 1.54% after record increases. The price of gold fluctuated between 4,720.14 and 5,622.29 USD/ounce.  

Stock Exchange

The WIG index rose by 2.05%. The price of the WIG index fluctuated between 122,271 and 127,290.  

Cryptocurrencies

The price of Bitcoin (BTC) fell by 12.02% and fluctuated between PLN 272,999 and PLN 318,682.  

Important events of the past week

Crash on the precious metals market: The end of the week brought unprecedented volatility to the bullion market. On Thursday, gold and silver were still hitting historic highs (gold approached USD 5,600 and silver exceeded USD 121 per ounce), only to suffer a spectacular collapse on Friday. In one day, the price of silver fell by more than 30% (the largest decline since 1980) and gold by 11%. The panic sell-off was caused by a combination of several factors: the cascade liquidation of leveraged positions by algorithms, Reuters' denial of alleged US support for strategic metals, and the appointment of a new Fed chair, which rapidly strengthened the dollar.

US interest rates unchanged and Fed nomination: On Wednesday, the Federal Open Market Committee (FOMC) kept interest rates unchanged at 3.50-3.75%, as expected, pointing to solid economic growth amid persistently elevated inflation. However, the biggest surprise was Donald Trump's decision on Friday to nominate Kevin Warsh as the new Fed chair. Warsh, perceived by the markets as a ‘hawk’ (a supporter of restrictive monetary policy), is the opposite of cheap money policy, which caused consternation on Wall Street, strengthened the dollar and translated into declines in stock indices.

Good GDP from Poland and zloty volatility: The Polish economy confirmed its resilience – preliminary GDP estimates for 2025 were 3.6%, which proves that the recovery is driven by investment and consumption. Despite excellent fundamentals (including an increase in the ESI sentiment index to 103.2 points), the zloty gave up its gains from the beginning of the week on Friday. This was the result of increased global risk aversion. The EUR/PLN exchange rate returned above 4.20, and the dollar (USD/PLN), which had previously been losing value, began to rapidly recover its losses in response to reports from the US.

EU-India agreement and tensions with Canada: Amidst stock market turmoil, a breakthrough in international trade took place. The European Union and India announced the conclusion of negotiations on a giant free trade agreement that will remove tariffs on, among other things, European cars and wines, opening up a market of 1.4 billion consumers. At the same time, Donald Trump threatened Canada with 100% tariffs in retaliation for its trade rapprochement with China (lowering tariffs on Chinese electric cars). The Canadian Prime Minister is trying to avert the crisis by exploiting loopholes in the USMCA agreement.

Tech company results: The stock market experienced turbulence related to the ‘Big Seven’ financial results season. Microsoft shares fell sharply (by as much as 12% during the session) – despite good overall results, investors were disappointed with the cloud segment data. This triggered a deep sell-off across the entire technology sector and renewed concerns about the sustainability of the artificial intelligence (AI) boom.

Events worth watching this week

Outlook for the zloty: Wednesday, 4 February, will be crucial for the zloty exchange rate, when the Monetary Policy Council announces its decision on interest rates. The market consensus is that the reference rate will remain at 4.00%. On Monday, 2 February, we will see the PMI reading for industry (forecast to rise to 49.0 points). These data will verify the mood in the manufacturing sector and allow us to assess whether the optimism following the latest GDP data is translating into real business activity.

Outlook for the euro: The volatility of the euro will be determined by Thursday's meeting of the European Central Bank (5 February). The market is pricing in a deposit rate of 2.15%, but the press conference with President Christine Lagarde will be key for investors. Additional context for ECB policy will be provided by Wednesday's producer price inflation data (PPI, 4 February) and Friday's reports from the German economy (industrial production and trade balance, 6 February), which will shed light on the condition of the eurozone's largest engine.

Outlook for the dollar: The dollar remains in the spotlight following the appointment of hawkish Kevin Warsh as Fed chair. The most important test for the US currency will be Friday's labour market report (NFP, 6 February). Analysts expect an increase of 67,000 new jobs with an unemployment rate of 4.4%. Earlier, the condition of the US will be verified by the ISM indices: industrial (Monday, 2 February) and services (Wednesday, 4 February; forecast: 53.8 points).

Outlook for the pound: On Thursday, 5 February, investors' eyes will turn to London. The Bank of England will decide on interest rates, with the market expecting them to remain at 3.75%. On the same day, the PMI index for the construction sector will be published, and the week will close with Friday's data on property prices according to the Halifax index (6 February), which will allow for an assessment of the state of the British housing market.

TREASURY DEPARTMENT

AFORTI.BIZ