Afternoon analysis 10.10.2017

The dollar under pressure from better than expected European data and the yuan appreciation. The zloty, like other currencies of emerging countries, gains from the weakness of the US currency.

EUR/USD pair close to 1.18

The euro's quotations in relation to the dollar have risen to the highest level since last Monday, i.e. October 2nd. One euro cost over 1.18 USD. Some parts of this increase were still taking place during the Asian session, which was most likely to be due to the yuan's appreciation in relation to the dollar. The German economy's data once again supported the euro.

Today, the German Federal Statistics Office (Destatis) has published foreign trade data that exceeded market expectations. August's goods trade surplus (seasonally adjusted) amounted to 21.6 billion EUR and was the highest since December last year. This is mainly due to exports, which grew by 3.1% per month, even though expectations were three times lower (market consensus was 1%). During the same period, import increased to a smaller extent, by 1.2%, and also exceeded expectations (0.5%).

This is another set of positive data from the biggest economy in the EU, which can support the euro in the coming days. Yesterday, the highest monthly growth in Germany's industry has been recorded for a year, the increase in the Germany's economic index also contributed to reaching the highest level of the analogical index in the eurozone for 10 years.

Weaker dollar helps the zloty

The Polish currency was in slightly better condition today, however, it was caused mainly due to external factors rather than internal ones. The weakening dollar today has had a positive impact of the valuation of emerging countries' currencies, including the zloty. The EUR/PLN exchange rate fell to its lowest level for nearly 2 weeks, reaching the 4.29 boundary, similarly to the franc's relation to the zloty, which also fell near to the 3.725 level.

The issue of Catalonia's independence remains relevant. This evening (around 6 p.m.), the President of the Catalan Government is scheduled to give a speech. The independence declaration would probably cause a greater risk aversion and could weaken the zloty, which is particularly vulnerable to the market sentiment deterioration. However, the chances for such a scenario are rather limited.

Probably, this statement will not cause greater emotion, which may also be suggested by news agencies, i.e. Bloomberg, (an associate of the Catalan government president said that this would be just a 'symbolic statement').

Tomorrow's preview

The calendar of scheduled events for tomorrow is limited. The most important event will probably be the publication at 8 p.m. regarding the record of September's meeting of the Federal Reserve monetary committee (so-called "minutes").

The statement and the press conference after the last meeting were relatively hawkish, which also resulted in an increase in the yield of the US treasury bonds and the dollar's appreciation. Although we can expect an increase in investor activity around the minute's publication (8 p.m.), ultimately any changes in the dollar are likely to be limited.

Trading on the exchange market on Wednesday can, therefore, be relatively calm. Probably the most important data this week will be released on Friday (consumer inflation in the USA). It can affect both the dollar and other currencies. In the case of higher than expected inflation data and an increase in the yields of the US treasury bond combined with the dollar's appreciation, excluding the euro, the emerging countries' currencies could depreciate due to capital outflows from these countries.