The upcoming, which began very optimistically on Asian stock exchanges (lower oil prices and Bernanke’s words that inflation should fall), will bring a long list of macroeconomic publications from which only a couple will have greater impact. Such publication certainly will be the Ifo index, which will be revealed on Tuesday. The Ifo Business Climate index has been falling in the last couple of months and in August the markets expects a reading at -0.3 points (to 97.2). News from the Euro zone usually have smaller impact (despite the Ifo) on markets but the economic slowdown is causing the decline of the EUR/USD. That is why investors will pay attention to this publication. Another important report will be durable goods publication from the U.S on Wednesday.

Again, news from the U.S can decide on the direction of markets this week. The most important will come from the housing market, with the Existing Home Sales coming up today and the New Home Sales coming up on Tuesday. On Thursday, investors will wait for the U.S GDP report. It will be the second reading and due to stronger export, it is expected that the data will be revised.

Finally, it will be an interesting week in the Polish economy. On Tuesday, the Retail Sales report will be published (forecasted 14.5% increase). On Wednesday, the Monetary Policy Council will decide on the interest rate level. I expect the MPC to keep interest rates unchanged at 6.00% mainly due to a weaker Złoty, slowing economy and falling oil prices. There is still room for one more interest rate hike and it can happen in September. On Thursday, the Polish GDP will be published and a reading between the 5.5% - 5.8% range is very probable.

Adam Narczewski