Market Summary by AFORTI: FED interest rate cut, Moody's rating outlook for Poland, meeting between the Foreign Ministers of Poland and China

2025-09-22

In the past week, financial markets were influenced by the US Federal Reserve's interest rate cut and Moody's change in Poland's rating outlook. In response to these events, the euro and dollar strengthened against the zloty, while gold and Bitcoin prices increased. The WIG index and Brent crude prices fell. In the coming week, the zloty's valuation will be affected by the prospect of further interest rate cuts by the Polish Monetary Policy Council (RPP), while the euro and dollar will be influenced by key macroeconomic data and central bankers' statements.

Economic indicators

Poland

CPI (m/m) (August): 0.0%; forecast -0.1%; previous 0.3%.
CPI (y/y) (August): 2.9%; forecast 2.8%; previous 3.1%.
Core CPI (y/y) (August): 3.2%; forecast 3.1%; previous 3.3%.
Corporate sector wages (y/y) (August): 7.1%; forecast 7.8%; previous 7.6%.
Employment growth (y/y) (August): -0.8%; forecast -0.8%; previous -0.9%.
Industrial production (y/y) (August): 0.7%; forecast 0.3%; previous 3.0%.
PPI (y/y) (August): -1.2%; forecast -0.9%; previous -1.2%.

Eurozone

CPI (y/y) (August): 2.0%; forecast 2.1%; previous 2.0%.
CPI (m/m) (August): 0.1%; forecast 0.2%; previous 0.0%.
Trade balance (July): 12.4B; forecast 11.7B; previous 8.0B.
Industrial production (m/m) (July): 0.3%; forecast 0.4%; previous -0.6%.
Industrial production (y/y) (July): 1.8%; forecast 1.7%; previous 0.7%.

Germany

ZEW Current Economic Conditions Index (September): -76.4; forecast -75.0; previous -68.6.
ZEW Economic Sentiment (September): 37.3; forecast 25.3; previous 34.7.
ZEW Index (September): 26.1; forecast 20.3; previous 25.1.
PPI (y/y) (August): -2.2%; forecast -1.8%; previous -1.5%.
PPI (m/m) (August): -0.5%; forecast -0.1%; previous -0.1%.

France

3-month French government bond (BTF) auction: 2.007%; forecast N/A; previous 1.989%.
6-month French government bond (BTF) auction: 2.027%; forecast N/A; previous 2.006%.
Business climate (September): 96; forecast 96; previous 97.

United Kingdom

CPI (y/y) (August): 3.8%; forecast 3.8%; previous 3.8%.
Unemployment benefit claims (August): 17.4K; forecast 15.3K; previous -33.3K.
Employment change 3m/3m (m/m) (July): 232K; forecast 220K; previous 238K.
Unemployment rate (July): 4.7%; forecast 4.7%; previous 4.7%.
Average earnings including bonuses (July): 4.7%; forecast 4.7%; previous 4.6%.
Retail sales (m/m) (August): 0.5%; forecast 0.4%; previous 0.5%.

USA

Interest rate decision (Q3): 4.25%; forecast 4.25%; previous 4.50%.
New York manufacturing index (September): -8.70; forecast 4.30; previous 11.90.
Core retail sales (m/m) (August): 0.7%; forecast 0.4%; previous 0.4%.
Retail sales (m/m) (August): 0.6%; forecast 0.2%; previous 0.6%.
Crude oil inventories: -9.285M; forecast 1.400M; previous 3.939M.
Initial jobless claims: 231K; forecast 241K; previous 264K.
Export price index (m/m) (August): 0.3%; forecast -0.1%; previous 0.3%.
Import price index (m/m) (August): 0.3%; forecast -0.2%; previous 0.2%.
Industrial production (m/m) (August): 0.1%; forecast -0.1%; previous -0.4%.
Atlanta Fed GDPNow model (Q3) P: 3.4%; forecast 3.1%; previous 3.1%.

China

Fixed asset investment (y/y) (August): 0.5%; forecast 1.5%; previous 1.6%.
Industrial production (y/y) (August): 5.2%; forecast 5.7%; previous 5.7%.
Unemployment rate (August): 5.3%; forecast 5.2%; previous 5.2%.

Currency Market:

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.18. The euro price ranged between 4.2444 and 4.2669.

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Similarly, the dollar (USD) strengthened against the Polish zloty (PLN) by 0.08%, following significant declines related to the Fed's interest rate cut. The dollar price ranged between 3.65673 and 3.6362.

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Oil and Gold Market

The BRENT crude oil price fell by 0.37%. The price ranged between 66.60 and 68.68 USD per barrel.

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Gold, meanwhile, increased by 1.03%, reaching new peaks. The gold price ranged between 3,664.75 and 3,738.85 USD per ounce.

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Warsaw Stock Exchange

The WIG index fell by 0.97%. The WIG index price ranged between 104,912 and 107,747.

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Cryptocurrencies

The Bitcoin (BTC) price increased by 0.10%. The Bitcoin price ranged between 405,005 and 424,216 Polish zloty.

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Important Events from Last Week

Fed Interest Rate Cut: The Federal Reserve (Fed), after a nine-month pause, cut interest rates by 25 basis points, setting them in the range of 4.00% to 4.25%. The decision was justified by a weakening labor market and rising unemployment, though it was also a result of strong political pressure from President Trump's administration. Despite the cut itself, the message from Chairman Jerome Powell was interpreted by the market as "hawkish," suggesting no rush for further rate cuts. Better-than-expected economic data from the US that arrived the same week strengthened the dollar. As a result, the EUR-USD exchange rate gradually fell below 1.18.

Change in Poland's Rating Outlook by Moody's: Moody's agency, like Fitch earlier, changed Poland's rating outlook from stable to negative, while maintaining the rating itself at A2. This decision was justified by forecasts of significantly higher budget deficits and systematic growth in public debt, which may exceed 65% of GDP by 2026. The Ministry of Finance commented that a return to a stable outlook would be possible if Poland implements a credible fiscal consolidation path. The market reaction to this news was moderate. The zloty recorded only a slight weakening, and the EUR-PLN exchange rate rose to around 4.26.

Meeting between the Foreign Ministers of Poland and China: During the meeting between the Foreign Ministers of Poland and China, the Polish side did not yield to Beijing's pressure and did not agree to unblock the border crossing with Belarus in Małaszewicze, which handles about 90% of rail freight transport between China and Europe. Despite the lack of agreement on this key issue, the meeting resulted in the signing of an agreement to unblock Polish poultry exports, worth about 2 billion zloty annually. Due to the limited and long-term nature of these arrangements, this event did not have a direct impact on the zloty exchange rate. However, Poland's balancing between relations with the US, the European Union, and China may affect the perception of the Polish currency in the future.

Debut of the First Bitcoin ETF on the Warsaw Stock Exchange: The first ETF fund providing exposure to Bitcoin — Beta ETF Bitcoin Portfelowy FIZ — debuted on the Warsaw Stock Exchange. This fund reflects changes in the price of Bitcoin futures contracts listed on the American CME exchange, enabling investors to participate in the cryptocurrency market in a regulated and safer environment. It is a product intended for investors who accept the very high risk characteristic of digital assets. The debut of this instrument did not cause direct, noticeable movements in the exchange rates of major currencies, as this is an event primarily significant for the capital market and the digital asset segment.

Proposal for a War Tax and Interest Rate Cuts: In the public debate, a proposal for a "war tax" was put forward by RPP member Ludwik Kotecki to finance armaments and reduce the deficit. The plan would involve cuts in social benefits such as the 800+ program, 13th and 14th pensions, and the introduction of a new tax for five years. Finance Minister Andrzej Domański rejected these plans, assuring that the government does not intend to introduce a new tax or suspend benefits, and costs will be covered by increased budget revenues. Regardless of this discussion, weak economic data, including slowing wage dynamics, create conditions for further monetary policy easing. Economists assess that there is a growing chance for another interest rate cut by the RPP as early as October, which could put additional pressure on the zloty.

Events Worth Noting This Week

Outlook for the Zloty: The zloty will be under pressure from the prospect of further interest rate cuts by the RPP, supported by weak macroeconomic data and Moody's negative outlook on Poland's rating. As a result, the zloty may continue its slight weakening, especially in the context of a strengthening dollar. Monday's retail sales data and Tuesday's unemployment rate will be crucial for its valuation.

Outlook for the Euro: The direction of the euro's valuation will be primarily determined by preliminary PMI indicators for manufacturing and services from the eurozone. Statements from European Central Bank representatives, including President Lagarde, will also have a significant impact, as they may provide hints about future monetary policy. The euro will also remain influenced by global market sentiment and the strength of the US dollar.

Outlook for the Dollar: The dollar enters the new week strengthened by the Fed's "hawkish" message, which despite the rate cut is not rushing to further ease monetary policy. The value of the USD will depend on a series of key data, including Tuesday's PMI indicators and publications regarding American spending and income (PCE) later in the week. Better-than-expected data, similar to the previous week, may continue to support the dollar.

Outlook for the Pound: The valuation of the British pound will be shaped mainly by expectations regarding future actions of the Bank of England (BoE). Investors will focus on Tuesday's PMI readings and Monday's appearances by members of the Monetary Policy Committee. Signals regarding the central bank's assessment of the current economic situation, which may indicate further steps, will be key.

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