Market Consensus Favors No Change in Polish Interest Rates, Analysts Leave Door Open

The market seems to agree that interest rates in Poland should remain unchanged. Still, analysts leave the door open. The dollar continues to strengthen, and oil is looking for its bottom.

Pretext to strengthen the dollar

The market is clearly looking for a reason for the current strengthening of the U.S. dollar. Investors evidently want to buy the American currency, and technically we have drawn a very nice downward pattern over the past five days. So, what’s the problem? The fact that macroeconomic data doesn’t particularly cooperate. Yesterday we saw the PMI index for services as expected. A slightly better ISM report for services and data for October from the labor market, where the number of vacancies was significantly smaller than expected. On the one hand, it’s the worst data in years. On the other hand, in October the number of new jobs still exceeded the number of layoffs by 0.3 million. Only a deeper analysis of this report allows finding justification for current dollar strengthenings.

Oil is looking for its bottom

The oil market is currently facing significant problems. The reason is a lack of agreement on further cuts in extraction in the OPEC cartel. More and more often we hear that under the current circumstances, other countries would like to not only not participate in reductions but even increase production. Such opinions are now heard not only in, let’s be honest, secondary countries in terms of production like Ghana. Currently, we have an agreement on reducing production from a few days ago, but many analysts do not believe that countries, which agreed to the reduction, will actually keep their word. In addition, we have increasing reserves of oil in the USA and doubts about demand from China. As a result, we shouldn’t be surprised that a barrel of oil rebounded fractions of a dollar from the lowest levels since July last night. Taking into consideration oil traded in London. The American raw material was the cheapest since July. The strengthening dollar also doesn’t help oil quotations.

Waiting for the decision of the Monetary Policy Council

The markets have come to terms with the fact that today’s decision regarding interest rates appears to be uninteresting. It seems that after pre-election cuts, we entered the phase of waiting. Therefore, we shouldn’t expect changes in interest rates. It is at least the dominant scenario currently among analysts. Given that even in the forecast of the Central Bank the central projection, that is the level being the middle of possible inflation scenarios, is at 4% level or higher until the end of next year. Lowering interest rates would now signify that decision-makers know something the market and the authors of the forecast don’t know. Of course, we cannot rule this out, since the forecast was published on November 10 and much has changed in the markets since then.

Today in the economic data calendar, it is worth paying attention to:

16:00 – Canada – decision on interest rates.

Maciej Przygórzewski chief analyst at and Walutomat