Balance (Daily analysis 9.01.2019)

09.01.2019 13:39 | Marcin Lipka

Relatively good data from German foreign trade, especially if we consider the latest production readings. Chance of a positive message from trade talks between China and the USA. The zloty remains stable. The situation on the Polish currency should not change significantly in the following hours.

The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.

  • 4:00 p.m.: Statement after the Monetary Policy Council meeting.
  • 8:00 p.m.: Minutes from December's meeting of the Federal Reserve.

This time better data from Germany

After terrible readings of industrial production in Germany, which provoked a broad discussion among economists as to whether Germany did not fall into recession in the second half of 2018, today Destatis reported foreign trade data.

Perhaps it is not great, but it certainly does not show any kind of disaster shape the German economy. The foreign trade balance for November amounted to 19 billion EUR (adjusted by the number of working days and seasonally). Without seasonal adjustment, it was 20.5 billion, i.e. about 2 billion above forecasts. In addition, data for October was revised slightly upward.

Although exports did not surprise particularly positively (no change compared to 2017), there were fears that it might fall. Imports grew less than expected in annual terms (3.6%). Looking at the data from January, the contribution of net exports to GDP for 2018 is likely to be negative, but foreign trade is still far from the disastrous results achieved by industrial production. Therefore, today's data, taking into account the overall situation, can be assessed neutrally or even minimally positively.

However, events in Germany are still in the background of negotiation talks between China and the USA. Trade talks in Beijing are likely to be positive. Extending them by one day, according to the spokesman of the Chinese Ministry of Foreign Affairs, Lu Kang, shows that both sides are seriously involved in the discussion.

Bloomberg also quoted today comments by Hu Xijin, editor-in-chief of the Global Times, who said that the Chinese-American talks were over and that, according to Hu, "the situation is quite positive" and that the two parties agree on the content of the joint communication. Later it was also written that this announcement would be made public on Thursday morning Beijing time, i.e. on the night at CET time and in the evening on Wednesday US time. In addition to this positive information, there are also Twitter releases by President Trump, in which he stated that "talks with China are going very well".

On the other hand, it is difficult to expect that after one more serious meeting all issues will be solved. It seems, however, that the continuation of further talks, suggestions not to increase customs duties and the purchase of soya or energy raw materials from the USA by China will be a sufficiently positive message for the market, which can maintain a relatively positive sentiment.

Zloty still calm

The Polish currency remains stable. You have to pay about 4.30 PLN for the euro, and the dollar costs around 3.75 PLN. It seems that today's meeting of the Monetary Policy Council will not have much significance for the zloty. The market is aware that the chances of any changes in interest rates are minimal at the moment, especially as the main element of inflationary pressure disappeared this year, i.e. the threat of significantly higher energy prices.

Also when it comes to global factors, there are no strong impulses to change the zloty's situation. Today's minutes from the December meeting of the Fed are likely to confirm the dovish approach of the FOMC, and even if this is not the case, the latest statements by the Fed members and the Federal Reserve Chairman himself show that the chances for a tightening of monetary policy in the first half of the year are limited. It still seems that the baseline scenario is that the zloty will remain unchanged in relation to the euro or the dollar.


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