The data regarding the eurozone’s unemployment rate was slightly worse than expected. The agreement between Greece and its debtors had a minor impact on the market. We will receive significant data from the USA on Wednesday. The zloty has strengthened and the EUR/PLN is at its lowest level since October 2015.
Over the past few hours, we have received mixed data from the eurozone. On one hand, the labor market data was slightly worse than expected. The unemployment rate for March was estimated to decrease to 9.4%, but eventually this index’s value remained the same as in February (9.5%). Many countries of the eurozone quoted a decrease in unemployment, but the growth from Italy, Austria and Finland leveled out those optimistic tendencies.
On the other hand, the agreement between Greece and its debtors can be interpreted as positive. According to The Wall Street Journal, Greece will receive approximately 7 billion to pay their liability, which is due in July. Moreover, the country would have been insolvent without this aid. As a return, Greece agreed to decrease the pension age, as well as the tax-free allowance. In the case of worsening sentiment, this may decrease the short-term risk for the eurozone and limit chances for a more intense overvalue of the euro.
Significant data from USA and strong zloty
Tomorrow, we will receive the American ADP data, which will show whether a positive trend in employment has continued. We have repeatedly taken note that the ADP data is much less volatile than the official data from the American Labor Department. However, if the ADP confirms a slowdown in employment (120k-130k), this could cause depreciation pressure on the dollar.
Tomorrow’s data from the services ISM may be just as significant. This index was in a positive condition until February, in March it went down from 57.6 to 55.2 points. Moreover, its employment component decreased from 55.2 to 51.6 points. If the latter goes below 50 points, the dollar may wear-off significantly.
However, the Federal Reserve meeting tomorrow is unlikely to bring any surprises, because there is no press conference afterwards. The meeting alone will not include any macroeconomic forecasts. Perhaps the minutes will reveal more, however, they won’t be available for three weeks.
The zloty has continued its strengthening against the main currencies, as well as against the forint. The EUR/PLN has reached its lowest level since October 2015 (4.2050). It’s difficult to say whether this was a result of limited market liquidity, or positive sentiment towards some of the EM currencies (the South African rand and the South Korean won have quoted even larger growths). Thursday’s session will test the zloty’s condition, but it seems that the Polish currency is definitely strong, as well as less vulnerable to external factors, compared to the other EM currencies.