Poland manages to bring inflation to single digits. This is considered a success considering that it required freezing fuel prices. The US dollar continues to strengthen, despite weaker data. Building a coalition is proving difficult in Slovakia.
8.2% Inflation
The decrease in the rate of price increase is of course pleasing. 8.2% is a result significantly better than expected, as an increase of 8.5% was anticipated. However, an annual rate of 8.5% is quite considerable. On the other hand, in terms of monthly performance, this is the fifth consecutive month of price stability. It can’t be called a decrease, as there remain three months of no change, but it’s a very favourable statistic. There is, of course, a “minor” issue. We have artificially low fuel and electricity prices. Consequently, if prices were to be normalized, the outcome would be far worse. This is somewhat good news for our wallets for now, but one must remember, someone is financing this difference. As a result, we have a ticking time bomb that someone will eventually have to defuse.
Impactless weaker data from USA?
Last Friday, we learned data from the USA. Americans’ spending increased by 0.4%, slightly slower than expected. Americans’ income also rose by 0.4%. The Chicago PMI index fell shorter than expected as well. The only report that did better was from the University of Michigan. It may seem that after such data, the dollar should strengthen against the euro. Turns out, it was the opposite. Some commentators point to the calendar effect. Friday was the last day of September ending the quarter. As a result, investors could have looked broader than just the latest data, and the last weeks have been really good for those counting on the improvement of the USD rate.
Election in Slovakia
In our southern neighbour country, the election was won by the somewhat controversial formation led by Robert Fico. Media pay attention to his views. He is, among other things, a supporter of ending military support for Ukraine, which in this part of the world, except for Hungary, is a very unpopular demand. The political scene in Slovakia is unique. Currently, Robert Fico won the election against the party of his former deputy to whom he handed over power after he had to relinquish power when he was politically blamed for the murder of an investigative journalist. The anti-NATO and anti-EU views of the winner complicate the coalition building. Markets do not like lack of stability. Slovakia is not a significant element for the euro currency, but a large instability will certainly not help the already under pressure union currency.
Today in the economic data calendar, a series of PMI index publications for the industry is planned.
Maciej Przygórzewski – Chief analyst at InternetowyKantor.pl and Walutomat
