Market Summary by AFORTI: Violation of Polish airspace, Zapad 2025, fall of the French government, US interest rates

2025-09-15

Last week, financial markets were influenced by geopolitical events, such as the violation of Polish airspace and the fall of the French government. The European Central Bank kept interest rates unchanged, while inflation data in the US was mixed. In response to these events, the euro strengthened against the zloty, the dollar also gained, while oil, gold, the WIG index and Bitcoin prices rose. In the coming week, the key events will be the interest rate decisions of the Fed and the Bank of England, as well as Moody's review of Poland's rating.

Economic indicators

Poland

1. Thomson Reuters IPSOS PCSI index (m/m) (September): value 50.63; forecast 48.90;

2. Current account balance (EUR) (July): -1,335M; forecast none; previously 651M.

Eurozone

1. German industrial production (m/m) (July): value 1.3%; forecast 1.1%; previous -0.1%.

2. German trade balance (July): value 14.7B; forecast 15.7B; previous 15.4B.

3. Industrial production in France (m/m) (July): value -1.1%; forecast -1.4%; previously 3.7%.

4. CPI in Germany (m/m) (August): value 0.1%; forecast 0.1%; previously 0.3%.

5. Deposit rates (September): value 2.00%; forecast 2.00%; previously 2.00%.

6. Interest rate decision (September): value 2.15%; forecast 2.15%; previously 2.15%.

Germany

1. Industrial production in Germany (m/m) (July): 1.3%; forecast 1.1%; previously -0.1%.

2. German trade balance (July): 14.7B; forecast 15.7B; previously 15.4B.

3. CPI in Germany (m/m) (August): 0.1%; forecast 0.1%; previous 0.3%.

4. CPI in Germany (y/y) (August): 2.2%; forecast 2.2%; previous 2.0%.

France

1. Industrial production in France (m/m) (July): -1.1%; forecast -1.4%; previously 3.7%.

2. CPI in France (m/m) (August): 0.4%; forecast 0.4%; previously 0.2%.

3. HICP in France (m/m) (August): 0.5%; forecast 0.5%; previously 0.3%.

4. HICP in France (y/y) (August): 0.8%; forecast 0.8%; previously 0.9%.

5. Thomson Reuters IPSOS PCSI index in France (September): 39.89; forecast 39.70; previously none.

United Kingdom

1. GDP (m/m) (July): value 0.0%; forecast 0.0%; previously 0.4%.

2. BRC retail sales index (y/y) (August): value 2.9%; forecast 2.0%; previously 1.8%.

3. Industrial production (m/m) (July): value -0.9%; forecast 0.0%; previously 0.7%.

4. Factory goods production (m/m) (July): actual -1.3%; forecast 0.1%; previous 0.5%.

5. GDP q/q (July): actual 0.2%; forecast 0.2%; previous 0.3%.

6. Trade balance (July): value -22.24B; forecast -21.60B; previously -22.16B.

7. Trade balance with non-EU countries (July): value -10.16B; forecast —; previously -10.78B.

USA

1. PPI index (m/m) (August): value -0.1%; forecast 0.3%; previous 0.7%.

2. Crude oil inventories: value 3.939M; forecast -1.900M; previous 2.415M.

3. Initial jobless claims: value 1,939K; forecast 1,950K; previous 1,939K.

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

5. CPI (y/y) (August): actual 2.9%; forecast 2.9%; previous 2.7%.

6. Initial jobless claims: actual 263K; forecast 235K; previous 236K.

7. Federal budget balance (August): value -345.0B; forecast -305.7B; previous -291.0B.

8. University of Michigan inflation forecasts (September): value 4.8%; forecast 4.8%; previous 4.8%.

9. University of Michigan consumer sentiment index, final (September): value 51.8; forecast 54.9; previously 55.9.

10. Number of drilling rigs according to Baker Hughes: value 416; forecast —; previously 414.

China

1. Exports (y/y) (August): actual 4.4%; forecast 5.0%; previous 7.2%.

2. CPI (m/m) (August): actual 0.0%; forecast 0.1%; previous 0.4%.

3. CPI (y/y) (August): value -0.4%; forecast -0.2%; previous 0.0%.

4. PPI (y/y) (August): value -2.9%; forecast -2.9%; previous -3.6%.

5. New loans (August): value 590.0B; forecast 700.0B; previously -50.0B.

6. M2 money supply (y/y) (August): value 8.8%; forecast 8.7%; previously 8.8%.

Currency market

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by only 0.19%, following significant gains in the middle of the week. The euro traded in the range of 4.2442–4.2677.

Similarly, the dollar (USD) strengthened against the zloty (PLN) by 0.08%. The price of the dollar fluctuated between 3.6055 and 3.6531.

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Oil and gold market

The price of BRENT crude oil rose by 1.97%. The price fluctuated between 65.56 and 67.97 USD/barrel.

Gold, on the other hand, rose by 1.13%, reaching new highs. The price of gold fluctuated between 3,623.02 and 3,713.12 USD/ounce.

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Stock Exchange

The WIG index rose by 0.81%. The price of the WIG index fluctuated between 104,123 and 107,718.

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Cryptocurrencies

The price of Bitcoin (BTC) rose by 2.41%. The price of Bitcoin fluctuated between PLN 400,805 and PLN 419,333.

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Important events of the past week

Violation of Polish airspace: On the night of 9–10 September, as a result of Russian drones violating Polish airspace, NATO launched a police mission involving aircraft from several allied countries. Thanks to a warning from Belarus, Poland was able to respond quickly, including with the use of Polish F-16 fighter jets. Initially, the incident caused the Polish zloty to weaken, but the EUR/PLN exchange rate quickly corrected itself and by Friday morning the zloty had begun to strengthen.

European Central Bank (ECB) keeps interest rates unchanged: On 11 September, the Governing Council of the European Central Bank decided to keep interest rates unchanged. ECB President Christine Lagarde announced the end of the disinflation process in the euro area, and inflation forecasts remained largely unchanged. This hawkish rhetoric, combined with weaker US labour market data, led to a weakening of the US dollar (USD) and an increase in the EUR/USD exchange rate to around 1.174.

Fall of the French government: In France, François Bayrou's government collapsed, highlighting the deep crisis of public debt. France's public debt currently stands at 116% of GDP. Financial markets reacted to this instability, with investors demanding higher risk premiums. The spread between French bonds and German Bunds widened sharply, negatively affecting the euro (EUR) and reflecting concerns about the stability of the eurozone's second-largest economy.

US consumer inflation: August consumer inflation (CPI) data in the US was mixed. Although year-on-year inflation rose in line with forecasts (2.9%), monthly growth (0.4%) exceeded expectations. The overall increase in inflation was mainly driven by higher energy and food prices. Despite these signals, the market still priced in a September interest rate cut by the Fed. These expectations weakened the US dollar (USD), as interest rate cuts typically reduce the attractiveness of a currency.

Zapad 2025: On 12 September, the Russian-Belarusian military exercises Zapad 2025 began in Belarus. Given the earlier violation of Polish airspace, this event raised serious concerns about regional security. Although the official number of 13,000 soldiers seems low, Western sources say that up to 150,000 soldiers may be participating in the manoeuvres. Geopolitical tensions such as these typically increase the risk premium for regional currencies, which could weaken the Polish zloty, among others.

Events to watch this week

Outlook for the zloty: The most important factor affecting the zloty is Moody's review of Poland's rating, scheduled for Friday, 19 September. A possible downgrade of the rating outlook could have a negative impact on the currency's value. In addition, the ongoing Russian-Belarusian military exercises Zapad 2025 are increasing geopolitical tensions in the region, which usually leads to an increase in risk premiums and a weakening of currencies, including the zloty. On Monday, 15 September, consumer inflation (CPI) data for August will be released, and on Thursday, 18 September, data on wages and industrial production will be published. These releases will provide investors with important information about the condition of the Polish economy, which will also affect the zloty exchange rate.

Outlook for the euro: The euro will be influenced by events on Monday, 15 September, when French government bond auctions and a speech by ECB President Christine Lagarde will take place, which has gained significance following the recent collapse of the French government. On Wednesday, 17 September, CPI and core HICP inflation data for the eurozone for August will be key for the value of the euro. This information will provide clues about the ECB's future monetary policy and could significantly affect market sentiment.

Outlook for the dollar: The most important event for the US dollar this week will be the FOMC's interest rate decision and press conference, scheduled for Wednesday, 17 September. The market largely expects a 25 basis point rate cut, and any deviation from this forecast could trigger a strong reaction from the dollar. Earlier, on Tuesday, 16 September, core retail sales and industrial production data will provide important information on the health of the US economy.

Outlook for the pound: This week, investors will be closely watching macroeconomic data from the UK, which may influence the Bank of England's (BoE) decision. On Tuesday, 16 September, labour market data, including average wages and the unemployment rate, will be released. On Wednesday, 17 September, consumer price index (CPI) data for August will be key. The week will culminate on Thursday, 18 September, when the BoE announces its decision on interest rates.

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