The last key data from the US before next week's meeting

Yesterday, American indexes fell. Technology companies were the main sufferers. Nasdaq Composite Index decreased by as much as 1 percent. The industrial Dow Jones performed better, closing the day only 0,1 percent lower. The broad SP500 was "under the mark" by 0,6%. In the evening, the EUR/USD rate rose above the level of 1,0750 again.

Today the markets are looking at key inflation report from the USA. The market still gives very little chance that the Fed will raise interest rates at next week's meeting. However, before we find out what the Federal Reserve will do, the ECB will decide earlier, tomorrow, on the further shape of monetary policy.

US inflation data

Today's report on inflation in the United States will be real the last important publication before next week's FOMC meeting. In my opinion, the results of today's indicators will not influence the decision of the US central bank. However, they will influence the outlook that the Fed will present for the coming months. The market is wondering whether the end of the cycle will be signaled or whether the lack of an increase will be just another pause and a kind of adjustment of monetary policy to the current situation in the economy.

Forecasts indicate that consumer prices in the United States increased again in August (from 3,2% to 3,6% y/y). However, this was probably mainly caused by the increase in fuels. On the other hand, the more important and less volatile core indicator is expected to increase only moderately by 0,2%. on a month-to-month basis. On a year-to-year basis, the "core" indicator is expected to be lower than a month ago (4,7%) and amount to 4,3%.

If the results are within expectations or are lower, the part of the market that assumes the end of the monetary tightening cycle will probably be satisfied. In such a scenario the dollar should weaken and main currency pair we will likely see higher levels. In my opinion, the rate will then be above 1,08. Wall Street should react with increases. Everything will depend on the scale of the surprise. In a higher inflation scenario, the reaction should be the opposite. Then the market will start speculating that although the Fed may not raise rates in September, there is a greater risk that the cost of money in the US will increase again in November.

PLN sale

Most economists surveyed by Reuters and Bloomberg indicate that there will be no changes. The futures market gives only 7%. chances for a raise in September. The lack of surprises in the decision will mean that the further course of quotations on the FX, bond and stock markets will depend on how the market interprets Powell's words at the press conference.

Moving on to other threads, it is worth paying attention to the situation on oil from a technical point of view. The price of Brent ($92,8) and WTI ($89,6) has left the "top" of the ascending triangle formation, which is another quite strong signal indicating a high probability of continued growth.

The zloty sale is in full swing. After last week's depreciation caused by the surprising decision of the Monetary Policy Council, this week brings the PLN weakening again by a few cents. Yesterday, on EUR/PLN, we approached 4,70, and on USD/PLN, the level of 4,38 was displayed for a moment. Our currency is the weakest against the pound sterling since December last year. In turn, the Swiss franc briefly became the most expensive since October 2022.

Source: Łukasz Zembik, OANDA TMS Brokers