Afternoon analysis 25.08.2016:
The American labor market, as well as the durable goods orders data is better than expected. Interview with Esther George, the Kansas Fed chairwoman. The zloty became weaker. However, this is rather not because of a limited discussion regarding a decrease in interest rates that was published in the minutes.
The American economic data from this morning was in general better than expected. New jobless claims went down to 261k and are 4k below the market consensus. The amount of people that receive benefits is now below the level of 2.15 million. This is a positive result as well. Both of the above values are near their historical minimum and indicate a positive situation in the labor market.
Theoretically, the orders data from the American industry may be interpreted positively. It increased 1.5% m/m, with exclusion of transport (especially planes that significantly disturb the monthly trend). This is much more than the forecasts at the level of positive 0.4% m/m.
However, it usually takes at least a few months for the industrial data to show an actual growth trend. Orders are below zero in year on year relation for the time being. A decline for the capital goods is at the 6.6% y/y level. However, this is partially a result of a significant reduction of investments in the mining sector.
Just before the American session has started, the Bloomberg television conducted an interview with Esther George. Chairwoman of the Kansas Fed, as well as the host of the central bankers meeting in Jackson Hole, is currently the most hawkish FOMC member. She was the only Fed member that voted for rate hikes in July.
Her statements confirmed that the main topic of this year's symposium will be the neutral interest rate level. Therefore, it's very possible that Janet Yellen will present her own studies and views regarding this topic. In our opinion, this, as well as a relatively neutral approach of the current monetary policy, should cause a wear-off of the American currency. The EUR/USD was a few pbs above the 1.1300 level in the afternoon.
The zloty was behaving relatively calm in the early afternoon. However, a clear wear-off of the Polish currency occurred shortly after 15.00 (3.00 PM). This caused the EUR/PLN to go above the 4.3200 level. It's difficult to say what caused this significant move, especially considering that the global situation was relatively calm at that time and the forint was gaining against the euro.
Minutes from the July's MPC meeting should not be the reason for a wear-off of the Polish currency as well. It contains a discussion regarding the possibility of a decrease in interest rates, but it wasn't much different from what we have been observing during past few months. Therefore, for the time being we don't think that the PLN depreciation will be durable.
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