Market Summary by AFORTI: US sanctions on Russian oil companies, lower inflation in the USA, positive economic data from Europe and Poland

2025-10-27

Last week was marked by US sanctions on Russian oil companies, lower-than-expected inflation in the US, which intensified expectations of an interest rate cut by the Fed, and surprisingly good economic data from Europe and Poland, which strengthened the zloty. The price of Brent crude oil rose by 7.27%, while gold recorded its biggest one-day decline in over a decade after setting a historic record. In the coming week, market attention will focus on interest rate decisions by the Federal Reserve (FOMC) and the European Central Bank (ECB), as well as key macro data, including Poland's CPI.

Economic indicators

Poland

1. Corporate sector wages (y/y) (September): 7.5%; forecast 7.5%; previous 7.1%

2. Employment growth (y/y) (September): -0.8%; forecast -0.8%; previous -0.8%

3. Industrial production (y/y) (September): 5.0%; forecast 7.4%; previous 0.7%

4. PPI (y/y) (September): -1.2%; forecast -1.2%; previous -1.2%

5. Retail sales (y/y) (September): 6.6%; forecast 6.8%; previous 3.0%

6. M3 money supply (y/y) (September): 11.1%; forecast 11.1%; previous 11.1%

7. Unemployment rate (September): 5.6%; forecast 5.6%; previously 5.5%

Eurozone

1. Speech by ECB President Lagarde (Tuesday, 21 October): No figures

2. Speech by Balz from the German Buba (Tuesday, 21 October): No figures

3. Speech by Balz from the German Buba (Wednesday, 22 October): No figures

4. Speech by Lane from the ECB (Thursday, 23 October): No figures

5. PMI index for services (October) P: 52.6; forecast 51.2; previously 51.3

6. PMI index for industry (October) P: 50.0; forecast 49.8%; previously 49.8%

Germany

1. Speech by German Bundesbank President Nagel (Monday, 20 October)

2. German services PMI (October): 54.5; forecast 51.1; previous 51.5

3. PMI index for industry in Germany (October): 49.6; forecast 49.5; previously 49.5

France

1. PMI index for services in France (October): 47.1; forecast 48.7; previously 48.5

2. PMI index for industry in France (October): 48.3; forecast 48.2; previously 48.2

United Kingdom

1. CPI index (y/y) (September): 3.8%; forecast 4.0%; previously 3.8%

2. Speech by Bailey, Governor of the Bank of England (Tuesday, 21 October): No figures

3. CPI (m/m) (September): 0.0%; forecast 0.3%; previously 0.3%

4. Producer price inflation (PPI Input) (m/m) (September): -0.1%; forecast 0.3%; previous 1.1%

5. Speech by BoE Deputy Governor Woods (Wednesday, 22 October)

6. Core retail sales (m/m) (September): 0.6%; previous 1.0%

USA

1. Crude oil inventories: -0.961M; forecast 2.200M; previous 3.524M

2. Federal Reserve balance sheet: 6.590B; previous 6.596B

3. Existing home sales (September): 4.06M; forecast 4.06M; previous 4.00M

4. Speech by Fed Vice Chair for Supervision, Barr (Wednesday, 22 October): No figures

5. Auction of 5-year inflation-protected Treasury securities: 1.182%; previously 1.650%

6. Natural gas storage: 87B; forecast 78B; previous 80B

7. CPI (m/m) (September): 0.3%; forecast 0.4%; previous 0.4%

8. CPI (y/y) (September): 3.0%; forecast 3.1%; previous 2.9%

9. Core CPI (m/m) (September): 0.2%; forecast 0.3%; previous 0.3%

10. University of Michigan Consumer Sentiment Index, final (October): 50.3; forecast 51.2; previous 51.7

China

1. PBoC benchmark lending rate: 3.00%; forecast 3.00%; previous 3.00%

2. GDP (y/y) (Q3): 4.7%; forecast 4.8%; previous 5.2%

3. Industrial production (y/y) (September): 5.0%; forecast 6.5%; previous 5.2%

4. Unemployment rate in China (September): 5.3%; forecast 5.2%; previously 5.3%

Currency market

This week, the euro (EUR) finally strengthened against the Polish zloty (PLN) by 0.07% after significant declines in the middle of the week. The euro price fluctuated between 4.2231 and 4.2470.

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Similarly, the dollar (USD) strengthened against the zloty (PLN) by 0.27%. The dollar price fluctuated between 3.6280 and 3.6616.

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Oil and gold market

The price of BRENT crude oil rose by 7.27%, mainly after the US imposed sanctions on Russian oil companies. The price fluctuated between USD 60.16 and USD 66.69 per barrel.

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Gold, on the other hand, fell by 5.75%. The price of gold fluctuated between USD 4,027.31 and USD 4,393.96 per ounce.

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Stock exchange

The WIG index rose by 3.40%. The price of the WIG index fluctuated between 108,586 and 112,024.

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Cryptocurrencies

The price of Bitcoin (BTC) rose by 2.01%. The price of Bitcoin fluctuated between PLN 390,000 and PLN 417,090.

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Important events of the past week

US sanctions on Russian oil companies: On Thursday, the United States imposed sanctions on Russian oil companies Rosneft and Lukoil in connection with the ongoing war in Ukraine. The move has been described as a significant escalation targeting Russia's key energy sector. In response to the decision, oil prices soared by around 5%, reaching their highest level in two weeks. The sanctions may prompt refineries in China and India, which are key customers, to reduce their purchases of Russian crude.

Lower inflation in the USA: US consumer inflation (CPI) for September was lower than market expectations, rising by 3.0% year-on-year (against a forecast of 3.1%). Core CPI also came in at 3.0% y/y, while monthly CPI growth (0.3%) was lower than forecast (0.4%). These lower readings reinforced market expectations that the Federal Reserve (Fed) will cut interest rates by 25 basis points as early as next week. Expectations of an imminent rate cut by the Fed are putting pressure on the US dollar (USD) to weaken.

PMI growth in Europe: Economic activity in the eurozone accelerated in October, surprising the market positively. The preliminary PMI index for industry rose to 50.0 points, exceeding expectations (49.8 points) and the recession threshold. The PMI index for services reached 52.6 points (against forecasts of 51.2 points), which was the highest level in over a year. These data suggest a ‘long-awaited awakening in the European economy’, which is a positive signal supporting the euro (EUR) exchange rate.

Good economic data from Poland: Polish GUS data for September turned out to be better than expected, signalling that the economy has entered a path of stable recovery. Industrial production rose by 7.4% year-on-year, significantly exceeding market forecasts. Construction and assembly production was positive for the first time in months (+0.2% y/y). Economists estimate that these strong macro data may have contributed to GDP growth of around 4% year-on-year in the third quarter. Strong data and economic recovery contributed to a significant strengthening of the zloty, with the EUR-PLN exchange rate falling from around 4.26 to 4.23.

Gold and silver price correction: Gold set a new all-time high on Monday at $4,394 per ounce. It then suffered its biggest one-day drop in more than a decade, losing about 6% and falling to $4,100. Silver fell even more sharply, recording a correction of about 9%. This sharp sell-off came after months of uninterrupted gains and was driven by a desire to hold free cash amid fears of a market crash. A massive sell-off of precious metals is often interpreted as a signal to flee to cash, historically strengthening the US dollar (USD).

Events to watch this week

Outlook for the zloty: Strong macroeconomic data, including estimated GDP growth of around 4% in Q3, suggest that the Monetary Policy Council (RPP) will hold off on further interest rate cuts, which supports the strengthening of the zloty. The key domestic indicator for this week will be Friday's CPI (y/y) index for 31 October, which will determine the MPC's further decisions. If October inflation remains close to the NBP's target, this will maintain positive pressure on the PLN and continue the appreciation trend.

Outlook for the euro: The main event for the eurozone will be Thursday's ECB interest rate decision (30 October), with a forecast of maintaining them at 2.15%. Markets expect the ECB to keep rates unchanged as inflation in the region remains close to the inflation target. In addition, eurozone Q3 GDP data, released on the same day, may confirm positive signals from the PMI and point to an economic recovery, which would support the EUR exchange rate.

Outlook for the dollar: The dollar will be in the spotlight due to Wednesday's FOMC interest rate decision (29 October), where the market consensus is for a 25 basis point cut to 4.00%. The potential weakening of the USD resulting from this cut is further compounded by uncertainty surrounding the ongoing government shutdown, which is entering its 26th day. Investors will also be analysing preliminary US GDP data for Q3, which will be published on Thursday and is expected to show growth of 3.0%.

Outlook for the pound: The pound is benefiting from an improvement in the private sector, where the UK Composite Output PMI rose to 51.1 in October, signalling that the economy is gaining momentum. On Monday, 27 October, the CBI Distribution Trade Survey will be an important indicator, with a forecast of -28. With no key Bank of England (BoE) decisions or important inflation data scheduled for the coming week, the GBP will be sensitive to broader global sentiment and the outcomes of the Fed and ECB meetings.

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