Market Summary by AFORTI: USA-EU trade agreement, CIT increase for Polish banks, geopolitical uncertainty

2025-08-25

Last week, financial markets were influenced by several key events. Initial optimism about peace talks on Ukraine weakened after Russia's statement. Poland saw a moderate economic recovery, with industrial production growing by 2.9%. The euro strengthened against the zloty by 0.12%, while the dollar maintained its value after earlier gains. The announcement of a CIT tax increase for banks caused a decline on the Warsaw Stock Exchange, with the WIG index losing 1.57%. The price of Brent crude oil rose by 2.49% and gold by 1.03%. At the same time, Bitcoin lost value, falling by 4.92%.

Economic indicators

Poland

1. Core CPI (y/y) (July): 3.3%; forecast 3.3%; previously 3.4%

2. Corporate sector wages (y/y) (July): 7.6%; forecast 8.6%; previously 9.0%

3. Employment growth (y/y) (July): -0.9%; forecast -0.8%; previously -0.8%

4. Industrial production (y/y) (July): 2.9%; forecast 1.6%; previously -0.4%

5. PPI index (y/y) (July): -1.2%; forecast -1.4%; previously -1.5%

Eurozone

3. Core CPI (y/y) (July): 2.3%; forecast 2.3%; previous 2.3%

4. CPI (m/m) (July): 0.0%; forecast 0.0%; previous 0.3%

5. PMI for services (Aug): 50.7; forecast 50.8; previous 51.0

6. Trade balance (Jun): 7.0B; forecast 18.1B; previous 16.5B

Germany

1. GDP (q/q) (Q2): -0.3%; forecast -0.1%; previous 0.3%

2. PMI index for industry in Germany (Aug) P: 49.9; forecast 48.8; previous 49.1

3. PMI index for services in Germany (Aug) P: 50.1; forecast 50.4; previous 50.6

4. PPI index in Germany (m/m) (Jul): -0.1%; forecast 0.1%; previous 0.1%

5. GDP (y/y) (Q2): 0.2%; forecast 0.4%; previous 0.3%

France

1. PMI index for industry in France (Aug) P: 49.9; forecast 48.2; previous 48.2

2. PMI index for services in France (Aug) P: 49.7; forecast 48.5; previous 48.5

3. S&P Global composite PMI index in France (Aug): 49.8; forecast 48.5;

United Kingdom

1. CPI (y/y) (July): 3.8%; forecast 3.7%; previous 3.6%

2. Consumer Price Index (CPI), not seasonally adjusted (July): 139.00; previous 138.90

3. PMI for services (Aug): 53.6; forecast 51.8; previous 51.8

4. Weekly API report on crude oil stocks: -2.400M; forecast -1.200M; previous 1.500M

5. Composite PMI (Aug) P: 53.0; forecast 51.6; previous 51.5

6. CPI (m/m) (Jul): 0.1%; forecast -0.1%; previous 0.3%

USA

1. FOMC meeting minutes: no data

2. Services PMI (Aug) P: 55.4; forecast 54.2; previous 55.7

3. Existing home sales (July): 4.01 million; forecast 3.92 million; previous 3.93 million

4. Crude oil inventories: -6.014 million; forecast -0.800 million; previous 3.036 million

5. Leading US index (m/m) (July): -0.1%; forecast -0.1%; previous -0.3%

6. S&P Global Composite PMI (Aug): 55.4; forecast 53.5; previous 55.1

7. Philadelphia Fed Manufacturing Index (Aug): -0.3; forecast 6.8; previous 15.9

8. Number of drilling rigs according to Baker Hughes: 411; previously 412

China

1. PBoC base lending rate (August): 3.50%; forecast 3.50%; previously 3.50%

2. PBOC base lending rate: 3.00%; forecast 3.00%; previously 3.00%

Currency market

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.12%. The euro price fluctuated between 4.2393 and 4.2649.

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The dollar (USD), on the other hand, maintained its value against the zloty (PLN) after increases. The price of the dollar fluctuated between 3.6249 and 3.6790.

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Oil and gold market

The price of BRENT crude oil rose by 2.49%. The price fluctuated between 65.36 and 67.95 USD/barrel.

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Similarly, gold rose by 1.03%. The price of gold fluctuated between 3354.02 and 3422.60 USD/ounce.

Stock Exchange

The WIG index fell by 1.57%. The WIG index price fluctuated between PLN 107,361 and PLN 112,003.

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Cryptocurrencies

The price of Bitcoin (BTC) fell by 4.92%. The price of Bitcoin fluctuated between PLN 405,250 and PLN 429,988.

Important events of the past week

Geopolitical uncertainty: Initial moderate optimism on the markets, triggered by intense diplomacy and Donald Trump's announcements about the possibility of a peace meeting on Ukraine, quickly faded. Russian Foreign Minister Sergey Lavrov denied plans for a meeting between Putin and Zelensky, and Russia once again presented conditions that were unacceptable to the Ukrainian side. The continuing geopolitical uncertainty continues to affect investor sentiment. Although there were no direct currency reactions this week, these factors indirectly improved the economic outlook, leading to gains on European indices.

USA-EU trade agreement: Last week, the USA and the European Union agreed to reduce tariffs on European cars from 27.5% to 15%. The agreement, which is the result of talks between Donald Trump and Ursula von der Leyen, is to apply retroactively from 1 August. The condition is a proposal from Brussels to reduce tariffs on selected American goods. Although this week sources did not note any direct, visible change in the EUR-USD exchange rate caused by this news, such trade measures may have a positive impact on trade balances in the future and, consequently, on the currency relationship between the euro and the dollar. Tariffs on alcohol remain unchanged, but talks about their reduction in the future cannot be ruled out.

Fed Chair on interest rates: The Federal Reserve (Fed) is approaching a phase of interest rate cuts, signalling a deteriorating situation in the US labour market, despite stable unemployment levels. Goldman Sachs forecasts three 25 basis point rate cuts later this year. Although the prospect of rate cuts usually leads to a weakening of the currency, strong PMI data for the US economy this week helped to strengthen the dollar. However, during his speech in Jackson Hole on Friday, Fed Chairman Jerome Powell surprised the market by expressing openness to lowering interest rates in the near future. As a result, the dollar weakened by 5 groszy.

CIT tax increase for banks in Poland: The Polish Ministry of Finance has announced plans to raise the corporate income tax (CIT) rate for banks to 30% in 2026. The decision is aimed at boosting the budget by an additional PLN 6.5 billion. This information triggered a sharp sell-off of bank shares on the Warsaw Stock Exchange and a significant decline in the WIG20 index. Experts warn that these changes may weaken Poland's attractiveness in the eyes of foreign investors, which will have a negative impact on the Polish zloty exchange rate. As a result, the EUR-PLN exchange rate rose by more than half a figure, and the USD-PLN also recorded an increase, signalling a weakening of the Polish currency.

Events worth watching this week

Outlook for the zloty: In the coming week, the market will analyse macroeconomic data from Poland, which may affect the value of the zloty. On Tuesday, the unemployment rate will be published. Any increase in this rate may be seen as a sign of economic weakness, which often leads to currency depreciation. On Friday, the consumer price index (CPI) will be published. A higher-than-expected reading could strengthen the zloty, as it would signal to the Monetary Policy Council to keep interest rates at an elevated level.

Outlook for the euro: On Monday, the markets will focus on the Ifo business climate index. An improvement in this index indicates growing optimism among entrepreneurs, which usually works in favour of the currency. On Thursday, the European Central Bank (ECB) will publish the minutes of its monetary policy meeting. An analysis of the minutes will allow us to assess whether the ECB is inclined to lower interest rates, which could weaken the euro. In addition, on Friday, Germany's CPI inflation index will be published, which is important for the entire Eurozone.

Outlook for the dollar: The value of the US dollar in the coming week will depend on inflation and labour market data. On Thursday, the number of jobless claims and GDP figures for the second quarter will be published. A lower number of jobless claims indicates a strong labour market, which may support the dollar. On Friday, the key event will be the publication of the Core PCE index. A high reading of this indicator may prompt the Federal Reserve (Fed) to maintain its restrictive monetary policy, which will strengthen the dollar.

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