Daily summary: A day full of excitement

Today's session really brought a lot of volatility and a lot of events. The most important development seems to be the communication from the ECB. On the other hand, we also had changes in the BoE policy, a lot of movements on the currency market, or falls on stock markets. Tomorrow, in turn, the NFP report, which could also bring even more volatility than today.

In theory, Lagarde said nothing today to suggest that changes in monetary policy are imminent. On the other hand, she sounded as if she did not want to confirm very much that these changes are coming. She herself indicated that one should be patient and wait for the upcoming macroeconomic projections, which might allow for monetary policy adjustments. The market perceived today's meeting as hawkish, which was later confirmed by market reports that the ECB is not ruling out hikes this year. The market is already pricing in up to 2 hikes this year and institutions are pointing to a fairly early end to the QE program, as early as July. EURUSD broke through the 1.1400 level today and is heading towards the last local peaks from mid-January.

The BoE raised the interest rate by 25bp to 50bp today, but it is clear that some members wanted a bigger hike. In this case, as many as 4 members wanted an increase to 0.75%. 5 members voted for a 25 bp hike. Nevertheless, it can be seen that interest rates in the UK may rise further.

Today's day was dictated by the publication of PMI indices and then ISM in the USA. In this case, we are mainly interested in the reading from the US, where we have a decline smaller than expected, although slightly larger in terms of the employment sub-index. Tomorrow's NFP report is expected to boost employment, but a negative surprise cannot be ruled out after the ADP report, especially by Omikron. On the other hand, we are seeing further declines in unemployment claims.

The declines were really significant today. DAX lost 1.5%, RTS was already down over 2%, which could be related to reports that Russia is looking for a false pretext to attack Ukraine according to reports from the USA. The WIG20, on the other hand, lost only 0.8%, which could be related to the fact that the president presented draft amendments to the law on the Supreme Court, which could lead to the end of the dispute between the Polish government and the European Commission.

In the US, the stock market retreat was mainly motivated by declines in companies operating in the entertainment industry. Facebook, already a Meta company, lost up to 25%. Companies such as Spotify and Snap saw declines of several percents. This was linked to weak expectations for the future in terms of customer base growth. The Nasdaq lost almost 3% today, while the S&P 500 was down around 2%.