Better data from Poland
On Friday we received data on industrial production from Poland.
Analysts expected a 2.5% increase, but we got 4.1%. This is, of course, a pleasant surprise, but 4.1% in a country that largely relies on industry is not an especially strong result.
It is still better than expected, but if we want to catch up with the West, this indicator should be higher.
On one hand, with defense programs, it is really little.
On the other hand, we must remember that our main trading partner, Germany, is currently going through a tougher economic period.
Therefore we cannot expect spectacular results in Poland, since on the other side of the Oder the economy has caught a breath. How did the markets react?
With a strong desire to find movement, one can find the strengthening of the zloty. The problem is that the scale of this change is small. The euro rate still exceeds 4.26 zloty.
Agreement in the Persian Gulf
Against the backdrop of the World Cup, peace talks between the USA and Iran are progressing. Over the weekend negotiations began in Switzerland. Positives – neither side has broken them. Progress is very slow for now, but there is agreement to work out a broader meeting within 60 days, for which a memorandum was signed. The problem remains Israel, which still believes that the current agreement does not prevent it from conducting operations in Lebanon. This does not change the fact that movement in the Strait of Hormuz is gradually returning.
Brent crude fell to around 79 USD after Friday's rises and today's morning correction. We must remember, however, that while restoring shipping in the Strait of Hormuz causes oil to cheapen, the return of crude from Iran to the market will to some extent curb price declines. Unless Ukraine continues successful attacks on Russia and the country has to leave more crude for domestic needs.
Dollar still strong
In recent days we are witnessing a clear strengthening of the dollar. The reason is that many investors expected that the new Fed Chair Kevin Warsh would cause us to stop talking about rate hikes in the near future. It turned out exactly the opposite. The first hike markets expect already in September, and the second in December.
Considering that at the beginning of this year people were still wondering when and how many cuts we would have, this is a big change. How important this reversal is best shown by the reaction of the world's main currency pair. Currently many analysts expected a move away from the dollar, due to the decline in the intensity of actions in the Persian Gulf. However, changes in US interest rates are so significant that despite peace actions the dollar still rises.
Today in the macroeconomic calendar it is worth paying attention to:
14:30 – Canada – consumer inflation.
