Afternoon analysis 01.09.2016

Jobless claims from USA remain positive. Surprisingly weak ISM index from the American industry. The zloty remains under pressure, despite that oday's data from Poland was better than expected.

Strong labor market

New data from the American labor market is positive. Weekly jobless claims remain in the area of 260k. This is very close to their many-year minimum. They are at the level of approximately 2.15 million, which is slightly above the lowest readings since the end of the 90s.

Accelerating data does not indicate disturbing signals for the labor market. This also increases the probability that tomorrow's payrolls will be near indications presented by the ADP. This fact should be favorable for the American currency as well.

However, it's worth keeping in mind the things we wrote about the Labor Department data. Its relatively small sample group (taking into consideration the population of enterprises) generates the risk of the data being deflected from the actual reading or the average.

The market will also try to evaluate the publications in the context of changes in salaries, as well as unemployment rate. The higher the increase in hourly wage, as well as the lower the unemployment level, the larger the chance that the American currency will increase its appreciation scale.

However, we think that the data will be relatively close to the consensus. This will cause the chances for rate hikes in September decrease. As a result, profitability of the American treasury bonds would decrease and the dollar would work-off its recent growths.

Negative signal from ISM and further wear-off of zloty

After 16.00 (4.00 PM), we received very weak data from the American industry. ISM, one of the basic accelerating indexes for the American industry, went down to the level of 49.4 points. These are the lowest readings since March and they suggest that the sector is shrinking.

Moreover, every crucial component has quoted a clear decline and went below the level of 50 points. New orders went down by 7.8 points (currently 49.1), and the production by 5.8 points (currently 49.6). Employment is at a lower level as well. However, the situation is not as dramatic in this case. Of course, one month doesn't have to mean that the trend has changed. But it will certainly be an argument for the Dovish Fed members to cease any moves at the September meeting.

The zloty did not take a chance to strengthen, despite better PMI readings. As a result, the EUR/PLN went above 4.3700 in the afternoon and the dollar has been testing the area of 3.93 PLN. However, we should especially focus on the pound. A positive global condition of the pound combined with weakness of the Polish currency, is causing the GBP/PLN to exceed the level of 5.2000. This is 0.30 PLN more than in the mid August.