The American economy has been fighting the mortgage market crisis for some time already. Last Friday, Fed’s Chairman Ben Bernanke assured investors that the Fed will take necessary steps, if needed, to bring peace back on the financial markets. This week will also bring a vast amount of important macroeconomic publications that can affect both the currency and equities markets.

Indices worldwide are recovering ground. The Dow Jones Industrial Average rebounded from mid-week 13,039 to 13,420. If the Dow breaks the 13,500 level, it may attack 13,700. The S&P 500, currently at 1,480 needs an impulse to attack 1,500. The Japanese Nikkei 225, rebounding from a low at 15,239 is at around 16,500. The moves of the major indices will much depend on the macroeconomic news flowing from the US and Euro zone. Basically, on each day important reports will be published. Investors though, will be waiting for the first Friday of each month and the US job market reports. Friday’s employment publications will show how the mortgage crisis really affected the American economy. Wednesday’s ADP employment report (Expected: 82K; Prior: 48K) will already be a good prediction of what the non-farm payrolls report will be (Expected August: 110K; Prior: 92K).

No macroeconomic reports will be published in Poland so local investors will dance to the music played by global markets. Improving mood of investors along with decreasing risk aversion should make emerging markets more attractive to investors. The WIG 20, currently at around 3,612, is on the rise. Breaking an important 3,630 resistance level can lift the Polish blue-chip index even higher.

The currency market is more sensitive to fundamental data. That is why investors need to pay attention to macroeconomic publications throughout the whole week. The most important will certainly be the Bank of England’s interest rate decision (Expected: 5.75%; Prior: 5.75%) and the European Central Bank’s interest rate announcement (Expected: 4.0%; Prior: 4.0%). Before that, investors need to focus on Tuesday’s reports: Euro zone (GDP, PPI), USA (ISM Manufacturing), Wednesday’s reports: USA (ADP employment report, Beigie Book), Canada (interest rate decision), Thursday’s reports: USA (Nonfarm Productivity, Unit Labor Costs, ISM Non-Manufacturing Index). On Friday, of course the US employment data will be on the spot.

Adam Narczewski