Now it's Powell's turn and data from the US labor market

Yesterday, a historic record was broken on the gold market. An ounce reached USD 2141. High demand for the metal has been visible since mid-February, but the largest increases have occurred gold notes in early March. The price increases corresponded to the declining session on Wall Street. The retreat from risk supported assets considered safe. The commodity is also gaining due to the prospect of interest rate cuts by major central banks. The environment of increased inflation also has a positive impact on valuation.

Today, the Monetary Policy Council will decide on the level of interest rates - no changes are expected and the level of 5,75 percent will be maintained. In turn, the attention of global investors will be focused on Powell's speech before Congress. Macro publications from the labor market (ADP, JOLTS) will also be important.

Risk of increased price pressure

The Monetary Policy Council should not surprise and will probably maintain the reference rate at 5,75%. We'll find out in March a new projection of the inflation path and GDP. These new forecasts, however, should not significantly influence the attitude of the representatives of the "decision-making body". The risk of renewed increase in price pressure as well as the still elevated core inflation will probably be an argument for a still restrictive attitude. The reason for maintaining the rates is the continuous increase in wages and the possible unfreezing of energy prices in the second half of 2024.

The government is reassuring us and says that we are not threatened with very large increases and the poorest citizens will still be protected. We don't know the details here yet and we will probably have to wait until April. As for VAT rates on food, they may return to 5%. from next month. This factor will also drive up inflation in the following quarters.

Falls on Wall Street

From the USA, we will receive two reports on the condition of the US labor market. ADP (14:15) is expected to increase to 150. (previously 107 thousand) and the number of vacancies according to the JOLST survey is to drop to 8850 thousand. from 9026 thousand These data will be a foretaste of what we will receive on Friday (NFP). Worse data showing cooling should support the narrative of faster interest rate cuts by the Fed, which should depreciate the USD and also support risk appetite and cause a decline in the yield of American bonds.

Yesterday's primaries confirmed that the presidential candidates of the new term in the US will most likely be Trump (Republicans) and Biden (Democrats).

Yesterday, the weakness of the US dollar was visible as a result of ISM data for industry. The index dropped from 53,4 to 52,6 points. The sub-index of prices paid dropped significantly to 58,6 points. and employment up to 48 points. However, the business activity index increased (57,2 points). We also received a slightly worse than the previous value but better than expected PMI index (52,3 points).

The American stock exchange reacted with declines to the data. He lost the most Nasdaq Composite (-1,7%), SP500 and Dow Jones ended the day with -1%. The EUR/USD rate rose to 1,0875, today this level is being tested again. The zloty remains strong, the EUR/PLN exchange rate is hovering around 4,31 and USD/PLN is currently at 3,9645.

Source: Łukasz Zembik, OANDA TMS Brokers