Afternoon analysis 09.09.2015

A record high level of job openings in the US. The New Zealand central bank meeting is crucial for the local currency. The zloty remains stronger, but further appreciation is dependant on the condition of the developed equity markets.

Data from the US

Published at 16.00 CET data on job openings (JOLTS) in the US economy is not a widely observed reading by the market participants. It will probably not push back or forward the interest rate hike perspective. However, it is worth noting how the job perspective has improved in the recent years.

The JOLTS rose in July to the highest level in history and were significantly above the economists' consensus (5.75 million vs 5.3 million). In the Labour Department report there are also less bullish messages especially concerning the level of people who actually received the job. On the quits rates, which is a good indicator of employee confidence, the number remained unchanged.

Chart on the unemployment level and the job openings

• Source: Bloomberg.
• Yellow line: level of unemployment in percentage points. Line white: jobs openings in thousands.

Especially in 2009, when the US economy ended its recession period, the JOLTS were showing an improvement on the job market significantly faster than the unemployment rate. Taking into account the strong employment trend in “payrolls” and solid JOLTS there are no reasons to expect any slowdown regarding the employment conditions.

The RBNZ decision

Before midnight CET time, the Reserve Bank of New Zealand (RBNZ) is expected to announce its decision on interest rates. The market consensus expect a cut by 25 bps to 2.75%. Additionally, it is anticipated that another benchmark cut can be announced in October.

A significant reduction in the macroeconomic projections is seen both on the inflation and GDP growth. This, however, the market should have already priced in. As a result, the market reaction may be dependant on the statement, especially regarding the developments in Asia. If the RBNZ sounds pessimistic, then the NZD/USD should slide towards the 0.63 level. On the other hand, in a scenario of no clear indication of more rate cuts (less probable) the pair may rebound even above the 0.65 mark.

Good sentiment on the zloty

The strong opening of the US markets supports the recent zloty gains. But to push the EUR/PLN below 4.20 the S&P 500 index should return above the 2k mark and continue the appreciation trend. It is currently not the base case scenario especially that equity investors still have in mind the strong swings from the last months.

The Swiss currency is still relatively weak. However, similarly to the EUR/PLN, the CHF/PLN is not really expected to slide below the 3.85 mark. As a result, the base case scenario for the frank is to remain around 3.85-3.87 level.