Afternoon analysis 06.05.2015

The dollar was battered by the weak data from the labour market. The zloty strengthens against the American currency. Insecurity regarding the future of Greece is growing. The Monetary Policy Council (RPP) didn't change the interest rates.

Recent days were supposed to answer some questions regarding the American economy slowdown in the first quarter of the year and whether it was caused by severe winter or it's character was more fundamental.

Up until now it was believed that the data from the labour market would prove the temporal character of the slowdown. Especially, the unemployed data, which was seen as an argument for this theory. The number of the jobless claims fell to a fifteen-year-low, just as the number of people on welfare.

This belief was supposed to be confirmed in the monthly data from the labour market. As a reminder - last month's data was a big disappointment - the report showed only a 126k growth in employment in the non-agricultural sector. The result was much worse than the expected 240k.

The weak report was announced by the ADP data, which was published two days before the report from the Department of Labour. This time it was alike - the report on newly employed in the private sector proved the companies to have increased the employment only by 169k, which was significantly lower than the anticipated 200k. Additionally, the data for the last month was revised downwards from 175k to 189k.

The optimism before Friday’s report was curbed. A very weak GDP result (only 0.2 percent against the expected 1 percent) and the foreign trade data are reports confirming the weakening of the recovery. Yesterday's deficit data showed that it was 10 billion dollars above the forecasts.

This situation delays the raise in increase rates over the ocean until later this year. This factor is working to the disadvantage of the dollar - the EUR/USD rate raised to the highest level since February 26.

Greece doesn't matter

The future of Greece becomes more and more hazed. The country has strengthened its position in relation to the negotiators close to the end of the talks. The good news is, Athens paid its liabilities to the International Monetary Fund. Repaying the interest to the amount of 200 million euro is yet the first challenge in front of Greece.

Even though May 11 is still a plausible date to reach an agreement, it gets less and less likely.

The zloty loses in relation to the euro and franc

Just as expected, the Monetary Policy Council did not change the level of interest rates. The main interest rate is still 1.5 percent, which is the lowest level in our financial history. During the press conference, the Polish monetary authorities confirmed their standpoint presented in the recent weeks, thus the reaction of the zloty was not relevant.

The zloty took advantage of the dollar's weakness – the rate of USD/PLN dropped down to 3.57 PLN. It is the lowest level since the beginning of January. However, the Polish currency has lost in relation to the euro, which is using the dollar's weakness and is not very concerned with the disturbances around Greece.

Weak data from the USA mean, that the Federal Reserve will stick to the easy monetary policy for longer. This factor will support the demand for hazardous assets, which is advantageous for the Polish currency.