The MPC left policy rate flat at 1.5%. Despite upward revision of inflation and growth forecast, the MPC sustained its dovish stance. This week GDP is the key domestic event and we expect growth to accelerate to 4.8% y/y. Labor market data (wage growth and employment) should confirm further tightening.
November 14: We expect GDP growth to accelerate to 4.8% y/y in 3Q17 above market consensus at 4.5% y/y. We expect to see GDP growth dynamics at 4.8% y/y, up from 3.9% in 2Q17. Overall robust performance of the industry as well as dynamic retail sales growth suggest strong growth momentum. Our forecast is above market expectations (4.5% y/y) and if proves to be correct another upward revision of this year growth is likely (from current forecast at 4.1%). November 17: Nominal wage growth and employment data to confirm further tightening. Nominal wage growth has been accelerating lately and we expect it to arrive at 6.3% y/y in October. Tight labor market conditions and labor shortages are likely to out further upward pressure on wages. Employment is expected to raise 4.5%
Long end of the curve moved down. Long-term yields have dropped over last week. Toward the end of the week the dovish tone of the MPC seems to cool down expectations for monetary tightening to begin sooner than governor Glapinski has been suggesting i.e.2019. It seems that hawkish MPC members remain in majority, yet the pressure will be gradually rising. The spread vs. Bunds have narrowed toward 300bp.
Zloty holds around 4.23 vs. EUR The zloty has been relatively stable throughout last week. There were no major impulses that could push the zloty more visibly. This week, if GDP growth surprises to the upside we may see short-lived strengthening as robust performance of the economy is mostly priced in. As far as global sentiment is concerned it seems that the expected rate hike in US in December is already in prices, limiting appreciation potential of the zloty.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.