The year 2016 certainly can be called a year of high volatility. Of course, we did not have such spectacular moves as the black Thursday in January 2015, when the SNB released franc against the euro, but certainly investors could not complain about the lack of major events or high volatility.
It is impossible not to mention Brexit or choice of Donald Trump for president of the United States. But the whole variability began with concerns about economic growth in China, which met with support from the government and what led to the principle on ongoing rally in the market of industrial raw materials. Concerns have contributed to the weakness of the US dollar, although the end of the year looks significantly different. It is difficult to determine which was the more important event for the financial markets in 2016: Brexit whether the choice of Donald Trump. Brexit despite concerns did not end with disaster in economy of UK and one of the most visible results of this event is very weak pound, which however, improves the economic outlook and led to new records in the UK equity index FTSE 100.
Of course greater impact on the majority of assets in the world had US dollar, which in turn is associated with the choice of Donald Trump for president of the United States. Choosing Trump was initially seen as a threat by the financial markets, but its announcement on the fiscal stimulus of the economy soon led to the euphoria in most markets in the world. Saying buy rumors, sell facts is ideally suited for the gold market this year. It is the choice of Trump for president led to withdrawal of prices of gold which gained against the volatility for most of this year. The dollar also gained thanks to the rise in interest rates announced by Fed at the end of this year, which was linked with rebound of inflation expectations, but also with very good economic data and enhancing perspectives.
Generally prospects for the world economy looks better, although there are plenty of concerns about economic growth in China and India – because of the demonetization carried out at the end of this year. In rebounding inflation definitely helps oil. Price this year reached historical lows which met with the possibility of production cuts due to the descent below cost. Oil market itself began to be balanced, however, OPEC together with other producers decided that it should intervene and using production cuts lead to more rapid stabilization of prices.
This was certainly not a good year for the Polish zloty. Yes, we saw quite low levels for EURPLN, but political turmoil and slowing economic growth led to weakness. It is also impossible not to mention the low mood on the emerging markets, which also added its 2 cents to the weakness of the Polish currency. Prospects for the Polish currency should be much better, although the risk factors will already occur on January 13 due to the rating upgrade from Moody’s and Fitch. The decision of the first will be crucial, because it has the highest rating from all three major agencies. It seems, however, that after recent positive forecasts from Moody’s, the January rating should not be changed.
At 9:30 today per euro we paid 4.4159 PLN, the dollar: 4.1990 PLN per pound: 5.1565 PLN, the franc: 4.1087 PLN.
Michał Stajniak, analityk XTB