Last week, key events included the maintenance of interest rates in Poland, the signing of the EU-Mercosur agreement and the escalation of the US dispute over Greenland. In the asset markets, the WIG index and Bitcoin recorded gains, as did oil and gold; at the same time, the zloty weakened against both the euro and the dollar. In the coming week, investors' attention will focus on the publication of macroeconomic data from Poland (production and wages), the PCE inflation reading in the US and the minutes of the ECB meeting.

Economic indicators

Poland

1. Current account balance (EUR) (November): value: -460M; forecast: 500M; previous: 2053M;

2. Interest rate decision (January): value: 4.00%; forecast: 4.00%; previous: 4.00%;

3. CPI (y/y) (December): value: 2.4%; forecast: 2.4%; previous: 2.4%;

4. CPI (m/m) (December): value: 0.0%; forecast: 0.0%; previous: 0.0%;

5. Core CPI (y/y) (December): value: 2.7%; forecast: 2.8%; previous: 2.7%;

6. Thomson Reuters IPSOS PCSI (m/m) (January): value: 50.55; previous: 48.37;

Eurozone

1. Sentix investor sentiment (January): value: -1.8; forecast: -5.1; previous: -6.2;

2. Trade balance (November): value: 9.9B; forecast: 14.8B; previous: 17.9B;

3. Industrial production (m/m) (November): value: 0.7%; forecast: 0.5%; previous: 0.7%;

4. Industrial production (y/y) (November): value: 2.5%; forecast: 2.0%; previous: 1.7%;

Germany

1. Annual GDP in Germany: value: 0.20%; previous: -0.50%;

2. CPI (y/y) (December): value: 1.8%; forecast: 1.8%; previous: 2.3%;

3. CPI (m/m) (December): value: 0.0%; forecast: 0.0%; previous: -0.2%;

4. HICP (y/y) (December): value: 2.0%; forecast: 2.0%; previous: 2.6%;

5. HICP (m/m) (December): value: 0.2%; forecast: 0.2%; previous: -0.5%;

6. Wholesale Price Index (WPI) (m/m) (December): value: -0.2%; forecast: 0.2%; previous: 0.3%;

France

1. CPI index in France (y/y) (December): value: 0.8%; forecast: 0.8%; previous: 0.9%;

2. CPI (m/m) (December): value: 0.1%; forecast: 0.1%; previous: -0.2%;

3. HICP (y/y) (December): value: 0.7%; forecast: 0.7%; previous: 0.8%;

4. HICP (m/m) (December): value: 0.1%; forecast: 0.1%; previous: -0.2%;

5. Government budget balance (November): value: -155.4B; previous: -136.2B;

United Kingdom

1. GDP (m/m) (November): value: 0.3%; forecast: 0.1%; previous: -0.1%;

2. Industrial production (m/m) (November): value: 1.1%; forecast: 0.2%; previous: 1.3%;

3. Factory goods production (m/m) (November): value: 2.1%; forecast: 0.4%; previous: 0.4%;

4. GDP (y/y) (November): value: 1.4%; forecast: 1.1%; previous: 1.1%;

5. Trade balance (November): value: -23.71B; forecast: -20.30B; previous: -24.17B;

6. BRC retail sales index (y/y) (December): value: 1.0%; forecast: 1.3%; previous: 1.2%;

USA

1. CPI (y/y) (December): value: 2.7%; forecast: 2.7%; previous: 2.7%;

2. CPI (m/m) (December): value: 0.3%; forecast: 0.3%; previous: 0.3%;

3. Core CPI (y/y) (December): value: 2.6%; forecast: 2.7%; previous: 2.6%;

4. Core CPI (m/m) (December): value: 0.2%; forecast: 0.3%; previous: 0.2%;

5. Retail sales (m/m) (November): value: 0.6%; forecast: 0.5%; previous: -0.1%;

6. Core retail sales (m/m) (November): value: 0.5%; forecast: 0.4%; previous: 0.2%;

7. Jobless claims: value: 1,884K; forecast: 1,890K; previous: 1,903K;

8. Philadelphia Fed manufacturing index (January): value: 12.6; forecast: -1.6; previous: -8.8;

9. Industrial production (m/m) (December): value: 0.4%; forecast: 0.1%; previous: 0.4%;

10. Crude oil inventories: value: 3.391M; forecast: -1.700M; previous: -3.832M;

China

1. Trade balance (USD) (December): value: 114.10B; forecast: 114.30B; previous: 111.68B;

2. Exports (y/y) (December): value: 6.6%; forecast: 3.0%; previous: 5.9%;

3. Import balance (y/y) (December): value: 5.7%; forecast: 0.9%; previous: 1.9%;

4. Total Social Financing in China (December): value: 2210.0B; forecast: 2000.0B; previous: 2490.0B;

5. New loans (December): value: 910.0B; forecast: 820.0B; previous: 390.0B;

6. M2 money supply (y/y) (December): value: 8.5%; forecast: 8.0%; previous: 8.0%;

Currency market

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.24%. The euro price fluctuated between 4.2185 and 4.2352.  

Similarly, the US dollar (USD) strengthened against the Polish zloty (PLN) by 0.47%. The price of the dollar fluctuated between 3.6379 and 3.6531.  

Oil and gold market

The price of BRENT crude oil rose by 1.56%. The price fluctuated between USD 62.81 and USD 66.81 per barrel.   

Similarly, gold rose by 1.83%. The price of gold fluctuated between USD 4,533.60 and USD 4,647.50 per ounce.   

Stock exchange

The WIG index rose by 0.12%. The price of the WIG index fluctuated between 119,967 and 122,600.  

Cryptocurrencies

The price of Bitcoin (BTC) rose by 4.93% and fluctuated between PLN 326,000 and PLN 351,600.

Important events of the past week

Interest rates maintained: The Monetary Policy Council kept interest rates at 4.00%, which, with CPI inflation at 2.4%, confirms that price pressure has fallen below the NBP's target. President Glapiński signalled the possibility of cuts to 3.5% in the coming months, depending on price stabilisation and consumer demand. The market reacted calmly: the EUR/PLN exchange rate remained around 4.21, and the slight weakening of the zloty against the dollar was due solely to global factors.

Signing of the EU-Mercosur agreement: Despite opposition from Poland and France, among others, the EU-Mercosur agreement abolishing customs barriers was finalised. The agreement, pushed through by the European Commission, may be referred to the CJEU due to concerns about the impact of cheap imports on European agriculture. Although the agreement is strategic for Germany, analysts point out that its real impact on markets and prices will only be visible in the longer term, after the provisions have been fully implemented.

Escalation of the dispute over Greenland: The dispute over Greenland escalated after Trump imposed a 10% tariff on Denmark for sending a mission to the island. The US president, seeking to purchase the territory for its raw materials and security reasons, was refused by Copenhagen, resulting in the announcement of retaliatory measures from February. Markets are watching the situation with caution, awaiting decisions from US courts, which may block the president's actions as exceeding his powers.

De-escalation of tensions in Iran: The situation in Iran has calmed down thanks to the mediation of Arab countries and the suspension of executions of protesters. The authorities in Tehran have regained control, and Trump has declared a diplomatic success, pointing to de-escalation without the need for armed conflict. The removal of the threat of invasion has brought relief to investors, eliminating the risk of an oil shock and sharp fluctuations in commodity currencies.

Events worth watching this week

Outlook for the zloty: Investors' attention will focus on Thursday, 22 January, when the Central Statistical Office publishes a package of key data: industrial production, producer price inflation (PPI) and wage and employment growth. These readings will verify the condition of the labour market in light of the NBP president's suggestion of a possible interest rate cut towards 3.5%. The zloty may also react to sentiment surrounding debt after successful bond auctions and developments surrounding the EU-Mercosur agreement, which Poland opposes.

Outlook for the euro: The single currency will start the week with Monday's final HICP inflation reading for the eurozone. On Tuesday, sentiment in the region's largest economy will be verified by the German ZEW index. An important point for monetary policy will be Thursday's publication of the minutes from the last ECB meeting (Minutes). The week will close on Friday with preliminary readings of the PMI indices for industry and services (eurozone, France, Germany), reflecting the condition of the private sector at the beginning of the year.

Outlook for the dollar: Due to Martin Luther King Day, the US market will be closed on Monday, but volatility will increase in the second half of the week. On Thursday, we will see data on jobless claims and PCE inflation, the Fed's preferred measure of price growth. The market will analyse these indicators in the context of Donald Trump's conflict with the Fed and attempts to undermine Jerome Powell's independence. Friday's preliminary PMI indicators for US industry and services will help assess the risk of recession.

Outlook for the pound: The pound will be shaken by Wednesday's release of CPI and PPI inflation indicators, which will directly affect expectations for Bank of England interest rates. The picture will be completed by Friday's retail sales data and the GfK consumer confidence index. On the same day, the market will also see preliminary PMI readings for the British services and manufacturing sectors, which will allow for an assessment of the state of the economy at the start of the year.

TREASURY DEPARTMENT

AFORTI.BIZ