Market Summary by AFORTI: Rejection of the peace agreement, interest rate cuts in Poland, political pressure on the Fed

2025-12-08

Last week, Russia's rejection of the peace agreement and the Monetary Policy Council's decision to cut interest rates, which coincided with better-than-expected data on Polish GDP driven by investments, were key factors. In the asset markets, the WIG Index and the price of Bitcoin recorded declines, while oil and gold gained in value and the zloty strengthened against the euro and the dollar. In the coming week, investors' attention will focus on the US FOMC's decision on interest rates and the ECB President's speech, as well as key inflation data from Germany and France.

Economic indicators

Poland

1. PMI index for industry (November): value 49.10; forecast 48.80; previously 48.80

2. GDP (y/y) (Q3): value 3.8%; forecast 3.7%; previously 3.3%

3. GDP (q/q) (Q3): actual 0.9%; forecast 0.8%; previous 0.8%

4. Interest rate decision (December): actual 4.00%; forecast 4.00%; previous 4.25%

5. Foreign exchange reserves (November): actual 229.07B; forecast none; previous 228.02B

Eurozone

1. CPI (y/y) (November): actual 2.2%; forecast 2.1%; previous 2.1%

2. CPI (m/m) (November): actual -0.3%; forecast none; previous 0.2%

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

4. PMI for services (November): value 53.6; forecast 53.1; previous 53.0

5. S&P Global Composite PMI (November): value 52.8; forecast 52.4; previous 52.5

6. GDP (q/q) (Q3): value 0.3%; forecast 0.2%; previous 0.1%

Germany

1. PMI index for industry (November): value 48.2; forecast 48.4; previously 49.6

2. Composite PMI index (November): value 52.4; forecast 52.1; previously 53.9

3. Factory orders (m/m) (October): actual 1.5%; forecast 0.3%; previous 2.0%

4. PMI index for services (November): actual 53.1; forecast 52.7; previous 54.6

France

1. Services PMI (November): actual 51.4; forecast 50.8; previous 48.0

2. S&P Global Composite PMI (November): actual 50.4; forecast 49.9; previous 47.7

3. Trade balance (October): value -3.9B; forecast -6.8B; previous -6.4B

United Kingdom

1. PMI index for industry (November): value 50.2; forecast 50.2; previous 50.2

2. Nationwide HPI (year-on-year) (November): actual 1.8%; forecast 1.4%; previous 2.4%

3. Composite PMI (November): actual 51.2; forecast 50.5; previous 52.2

4. Services PMI (November): actual 51.3; forecast 50.5; previous 52.3

5. Construction PMI (November): actual 44.5; forecast 44.1; previous 39.4

6. Halifax house price index (y/y) (November): value 0.7%; forecast none; previous 1.9%

USA

1. ISM index for industry (November): value 48.2; forecast 49.0; previous 48.7

2. ISM Services Index (November): value 52.6; forecast 52.0; previous 52.4

3. PMI Services Index (November): value 54.1; forecast 55.0; previous 54.8

4. Initial jobless claims: actual 191K; forecast 219K; previous 218K

5. Core PCE (year-on-year) (September): actual 2.8%; forecast 2.9%; previous 2.9%

6. Core Personal Consumption Expenditures (PCE) Index (MoM) (September): actual 0.2%; forecast 0.2%; previous 0.2%

7. Factory Orders (MoM) (September): actual 0.2%; forecast none; previous 1.3%

8. Crude oil inventories: value 0.574M; forecast -1.900M; previous 2.774M

9. ADP non-farm employment change (November): value -32K; forecast 5K; previous 47K

10. ISM services price index (November): value 65.4; forecast 68.0; previous 70.0

China

1. Caixin manufacturing PMI (November): value 49.9; forecast 50.5; previous 50.6

2. Caixin PMI for services (November): value 52.1; forecast 52.1; previously 52.6

Currency market

This week, the euro (EUR) weakened against the Polish zloty (PLN) by 0.18%. The euro traded in a range of 4.2247 – 4.2434.

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Similarly, the US dollar (USD) weakened against the Polish zloty (PLN) by 0.56%. The dollar traded in a range of 3.6195 – 3.6589.

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Oil and gold market

The price of Brent crude oil rose by 1.67%. The price fluctuated between USD 62.20 and USD 64.04 per barrel.

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Similarly, gold rose by 0.39%. The price of gold fluctuated between USD 4,194.85 and USD 4,296.85 per ounce.

Stock exchange

The WIG index fell by 1.69%. The price of the WIG index fluctuated between 109,635 and 112,537.

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Cryptocurrencies

The price of Bitcoin (BTC) fell by 2.23%. The price of Bitcoin fluctuated between PLN 306,735 and PLN 345,800.

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Important events of the past week

MPC decision: Contrary to its December tradition, but in line with market expectations, the Monetary Policy Council (MPC) cut interest rates for the sixth time this year. The 25 basis point cut brought the main rate down to 4.00%. The key argument for this decision was the decline in CPI inflation to 2.4% in November, which means that this indicator fell below the NBP's inflation target. Despite this dovish move, Governor Adam Glapiński announced that the Council would adopt a wait-and-see approach in order to assess the full impact of the cuts on the economy before taking further steps. The persistently high fiscal deficit was identified as a significant factor limiting further monetary policy easing.

Polish GDP data: In the third quarter, the Polish economy grew by 3.8% year-on-year, which turned out to be better than preliminary estimates and market forecasts. The change in the structure of this growth came as a surprise: the main driver was public investment, stimulated by record spending on armaments, rather than private consumption, as had been the case previously. Moderate consumption growth gives the Monetary Policy Council room to safely lower the cost of capital without the risk of excessive inflation. In addition, for the first time in a year and a half, net exports made a positive contribution to economic growth.

Rejection of the peace agreement: Despite intensive diplomatic efforts, including a visit to Moscow by Steve Witkoff, Donald Trump's special envoy, the peace talks ended in another failure. Russia rejected the proposals for an agreement, which Donald Trump dismissed by saying that ‘it takes two to tango’ and that Vladimir Putin's will was lacking in this arrangement. In the background of the negotiations, there were reports of attempts to trade Ukrainian resources and the return of Western companies to Russian projects in exchange for peace, but this did not convince the Kremlin. Trump publicly stated that Ukrainian President Volodymyr Zelenskyy ‘has no cards’ to play and missed the opportunity to strike a favourable deal.

Political pressure on the Fed: Donald Trump announced the end of the era of independence for the Federal Reserve (Fed), suggesting that the current chairman, Jerome Powell, be replaced by his economic adviser, Kevin Hassett. The president-elect has repeatedly criticised Powell for the slow pace of interest rate cuts, arguing that his resistance has hurt the US economy and families. The market interprets these signals as a harbinger of a cheap money policy, which in the medium term may weaken the dollar but favour stock market valuations.

Events worth watching this week

Outlook for the zloty: In the first half of the week, due to the lack of key macroeconomic readings from Poland, the zloty will react primarily to global market sentiment, reinforced by the recent decision of the Monetary Policy Council (RPP) to cut interest rates. The only significant domestic reading on the calendar is the Thomson Reuters IPSOS PCSI Index, which will be published on Thursday, 11 December. Apart from that, PLN quotations will be closely dependent on the strength of the US dollar after Wednesday's decision by the US central bank (FOMC).

Outlook for the euro: The condition of the eurozone's largest economy will be illustrated by German industrial production, which will be published on Monday, 8 December. Investors will also be closely watching the speech by European Central Bank (ECB) President Christine Lagarde on Wednesday, 10 December, for clues about future monetary policy. The week will close with key inflation data, including CPI indices from Germany and France, which will be released on Friday, 12 December.

Outlook for the dollar: The most important event of the week, which will determine the trend for the dollar, will be the Federal Open Market Committee (FOMC) decision on interest rates and accompanying economic projections, which will be announced on Wednesday, 10 December. Earlier, important data on labour demand will be provided by the JOLTS (Job Openings and Labour Turnover Survey) report, scheduled for Tuesday, 9 December. The picture of the labour market will be completed by weekly jobless claims, traditionally published on Thursday, 11 December.

Outlook for the pound: Sterling will react to consumer sentiment data, including the BRC Retail Sales Index, which will be released on Tuesday, 9 December. However, the key indicators for assessing the state of the economy will be the Gross Domestic Product (GDP) and industrial production data, which will be published on Friday, 12 December. Volatility in the pound may also be triggered by the speech by Bank of England (BoE) Governor Andrew Bailey, scheduled for Thursday, 11 December.

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