There is a void in the macro calendar, investors pay attention to other elements

The latest comments of Federal Reserve representatives, although not groundbreaking, allowed the dollar to make up for some of the losses incurred at the beginning of November. Yesterday, Powell did not comment in any way on the prospects for the Fed's monetary policy, so today investors' eyes will be focused again on the chairman of the Federal Reserve, who will take part in a panel discussion. Of the International Monetary Fund. It will address the challenges of monetary policy.

In Poland, the market was surprised no reduction in interest rates by the Monetary Policy Council, as a result of which the zloty and bank shares gained. In the macro calendar today, the number of publications is very limited.

The demand for risk is coming back

When the key macro publications are behind us and the calendar is boring, the market focuses on other elements. Now they are in the spotlight statements by individual Fed representatives and Chairman Powell himself. She hasn't brought anything new so far. However, decision-makers are trying to suppress the mood and are still "playing" the open door to further monetary tightening. At the same time members FOMC they are trying to warn the market not to draw hasty conclusions from one weak labor market report and emphasize that subsequent results will be crucial for the December decision.

The labor market is important but not crucial, and much will depend on the pause or raise at the last meeting further price growth dynamics. CPI indicators for the USA for October will be announced next Tuesday and it will probably be a day of increased market volatility. Further confirmation of a decline in inflation in the United States will weaken the dollar and cause demand for risk to become active again.

NBP decisions are not very predictable

In September, the National Bank of Poland surprised with a large reduction, which resulted in an avalanche weakening of the zloty. Yesterday, market disappointment resulted from the lack of changes in interest rates, which consequently contributed to the appreciation of PLN. The EUR/PLN pair dropped below 4,43 for a moment, and the USD/PLN exchange rate equalized the lows from early November and approached the level of 4,14 again. The market received further confirmation that NBP decisions are not very predictable. Communication with the market is still NBP's Achilles heel.

Is the lack of a reduction due to the results of the parliamentary elections? We can only speculate. The assumption is that in the new political reality, the Monetary Policy Council will change its front and treat it as a priority again price stabilization, not economic growth, it's starting to work. Therefore, at today's conference we can hear that the September-October move (a total reduction of 100 bp) was only an adjustment of monetary policy to the current macro situation in the country. If we receive a clear signal that rates will remain at a high level for a longer time and the previous changes in parameters are not the beginning of a full cycle of interest rate cuts, then the zloty has a chance to strengthen further.

Source: Łukasz Zembik, OANDA TMS Brokers