A calm start to a stormy week. Technology boom

Another positive week on global financial markets is behind us. Although global macro data were ambiguous, there was nothing that would shake investors' faith in a very favorable scenario of solid growth, falling inflation and interest rate cuts. It is against this background that the technology boom is taking place. This also favors the zloty, although it is worth noting a certain change in sentiment EUR / USD.

Four quarters of solid growth

The fourth quarter brought another strong GDP growth in the US. After a weaker 2022, it might have seemed like 2023 when interest rates hit with greater force, we will see a stronger slowdown and perhaps even a recession. Not only did this not happen, but we had four consecutive quarters of solid growth, driven primarily by consumption, but also with solid investment.

What's more, January PMIs showed improvement almost everywhere, but especially in the US and UK, suggesting this year could be even better. In addition, the data published on Friday showed a decline in the core PCE inflation to 2,9%, and this is the Fed's favorite measure. Does this mean that all data is perfect? No, regional indicators in the US recorded a deep decline in January as well The discrepancy with PMI is very puzzling. Worth watching, but not enough for the markets to spoil the mood.

The labor market is another clue?

This week promises to be extremely exciting. From the macro side, it is primarily the Fed's decision (Wednesday). If the Fed is actually going to cut interest rates in March, it will probably be clearly indicated at the January meeting (the hint should already be included in the statement) - this would be another positive stimulus for the markets. If not, the market will look to Friday's jobs data as another clue.

Quarterly results of companies will be equally important, as technology is driving growth on Wall Street. In this context, attention should be paid to Tuesday (post-session results Microsoft, Google and AMD) and Thursday (Apple, Amazon, Facebook).

It should be noted that despite the great sentiment on Wall Street, the dollar is doing well. Usually favorable sentiment means an outflow from the dollar, a strong euro and even stronger currencies of emerging markets. Why should it be any different now?

The center of investors' interest are American technology companies - so it cannot be ruled out that capital will not necessarily flow from the US even if the mood is good. And that would mean potential end to the strengthening of the zloty, which starts the week very steadily. Today at 9:20 a.m. the euro costs PLN 4,36, the dollar is PLN 4,03, the franc is PLN 4,67 and the pound is PLN 5,12.

Source: Dr. Przemysław Kwiecień CFA, XTB