Afternoon analysis 15.09.2017

Positive eurozone data - wage growth is accelerating and the number of vacancies remains on multi-year highs. The pound maintains the levels gained over the last day. Poor data on the US retail sales is causing pressure on the dollar. The zloty is strengthening. The EUR/PLN pair slightly below the 4.27 boundary. Record wage growth in Poland.

Today, Eurostat has published quarterly labour market data. Overall, it can be seen as fairly positive both, in terms of the single currency area economy and in terms of the euro's valuation. Labour costs in the eurozone increased by 1.8% YOY, including wages for employees by 2.0% YOY. In the case of the latter, this was the highest reading in two years.

Positive data on the vacancy rate (number of job vacancies in relation to all jobs) can also be perceived positively in the context of the economic situation. It remained at the level of 1.9%, which also means the highest levels for 11 years. It can, therefore, be considered that Friday's publications support the prospect of a relatively good economic situation in the following quarters.

Aside from the information from the eurozone, it is worth noting that the pound has kept most of the rises made in the past few hours. November's probability of rate hikes is more than 60% now, and in the next year, the market evaluates almost 50 basis points of monetary tightening. At the beginning of the week, these parameters amounted to 18% and 20 basis points respectively. The change is therefore very strong given such a short time and the absence of a real decision, but only a conditional promise to change the monetary policy. As a result, further appreciation of the sterling will be rather dependent on PM May's message statement on the Brexit policy next week. Subsequent significant interest hikes seem to be less and less likely at this point in time.

Weak data on the US retail sales. Stronger zloty

On the other hand, retail sales from the USA can be considered as disappointing. It fell by 0.2% MOM in August, with an expectation of +0.1% MOM. Additionally, July's data was revised downward by half (from 0.6% MOM to 0.3% MOM). Moreover, the reading excluding more variable factors (fuels, cars) was below expectations. Sales fell by 0.1% MOM but were expected to increase by 0.3% MOM.

It is extremely difficult to say whether the data was affected by the hurricanes that hit the US in August. The Census Office itself, which publishes the readings, has issued a statement from which no reliable conclusion can be drawn as to the influence of the natural disaster on the given values. The office also reports that "the hurricane had both, a positive and a negative impact on sales and some noted that it was not affected at all". According to the statement, it is also not possible to divide data by region in the US. After the statement publication, the dollar lost some of its value.

The afternoon situation on the zloty remains good. The weaker US readings and the dollar's depreciation additionally help the domestic currency. The EUR/PLN pair is testing the 4.27 level in the early afternoon and the USD/PLN falls below the 3.57 boundary. The Polish labour cost readings for the second quarter are also favourable for the zloty. They grew by 8.3% YOY, which is the highest level in 8 years. This may reduce the dovish comments from some MPC members. In the afternoon, the zloty also has pared all the losses recorded this week, which means that its current condition is mainly the result of global reshuffling.