Negative sentiment, the market is waiting for Friday's data

Negative sentiment prevailed on Friday due to continuing geopolitical tensions. It was also important that markets limited expectations regarding Fed interest rate cuts due to inflation risk. After subsequent reports that Israel's attack did not prompt quick retaliation from Iran, the situation calmed down somewhat. Ultimately, the Nasdaq Composite lost 2,1%. and the SP500 fell by 0,9%. Only the Dow Jones was positive and recorded a result of 0,6%. The zloty was slightly stronger, but it is still much weaker than a week ago.

Dynamic increases in gold and crude oil

On Friday morning, news of Israel's retaliation resulted in a dynamic increase in the price of gold and oil and, at the same time, a decline in the yield of US treasury bonds. At the end of the day, however, the quotations returned to the levels before these reports. The royal metal became more expensive and for a moment one ounce cost approximately USD 2415. Brent "came out" above the USD 90 level for a moment. This morning a barrel costs less than USD 86. The zloty finally made up for some of the losses incurred throughout last week, but it still remains weaker than a week ago. This morning the EUR/PLN exchange rate increases to 4,32 from 4,30 USD/PLN is above 4,05.

The market at the moment does not expect the Federal Reserve to cut interest rates at next week's meeting. June's easing is valued at less than 20%.

The Fed's semiannual financial stability report, released last Friday, found that "the risk of sustained inflationary pressures leading to a more restrictive monetary policy stance remained the most frequently cited risk."

We also received comments from Bostic from the Atlanta Fed, who said that he personally feels comfortable with the Fed maintaining interest rates. at a constant, high level. He emphasized that we should be patient, before decisions are made to ease monetary conditions. Austan Goolsbee, meanwhile, admitted that it makes sense at this point to wait and get more clarity before taking action. He noticed that achieving the Fed's 2% inflation target. will probably take longer than previously thought.

The Bank of China left rates unchanged

Among other events, it is worth noting that the US House of Representatives adopted four bills aimed at providing aid to Ukraine (USD 60 billion), Israel (over USD 26 billion) and Taiwan (over USD 8 billion). Now they are waiting for a vote in the Senate.

Tonight, the People's Bank of China left benchmark interest rates unchanged. at an unchanged level. The one-year rate shows a level of 3,45%. and the 5-year loan rate is 3,95 percent.

Last Friday, there was no data from the American economy. This week's two key releases are CBA for the first quarter on Thursday and the PCE deflator on Friday. Preliminary PMI readings for industry and services for European countries will also be important. The reading of the Chicago Fed economic activity index is scheduled for today. At 10:00 the Central Statistical Office released a package of data from the Polish economy.

Source: OANDA TMS Brokers