Afternoon analysis 26.08.2016

A series of statements from the FOMC members before Janet Yellen's testimony did not have a large impact on the situation in the currency market. The zloty is slightly gaining against the main currencies, but its overvalue against the forint remains within the range of 0.7-0.8% since yesterday.

A revision of the American GDP reading for the second quarter appeared this afternoon. The American economy was developing at the pace of 1.1% in the annualized quarter on quarter interpretations. This is 0.1% less than previously estimated. The data did not change in the year on year interpretation (1.2%). Thus, the data revision should be received neutrally.

Getting to the statements from particular FOMC members, three of them have spoken since noon. What's interesting is that one of them was yet again Robert Kaplan (he made statements three times during past few hours). The Bloomberg television interviewed James Bullard as well. Moreover, CNBC spoke with Loretta Mester.

Bullard's most recent analyses regarding the necessity of only one rate hike until 2018, are slightly limiting for his view on the monetary policy. Moreover, the St. Louis Fed chairman's statements are of quite a small significance. This is because he had took note that it's irrelevant when this small rate hike will occur.

Shortly after the interview with Bullard, CNBC conducted an interview with Loretta Mester. The Cleveland Federal Reserve representative is considered as slightly hawkish. However, not as hawkish as Esther George, who voted for the monetary tightening on the meeting in July.

According to information agencies (there's no video footage of the interview yet) Mester claimed that, “we want to look at the mid-term forecasts.” Also, she took note that, “time is not the most important, but the interest rates part is.” In general, this confirms that the discussion inside the Federal Reserve regarding target level of interest rates, will be dominating during the coming hours.

Zloty has difficulties with working-off its losses

Our region's currencies are being supported by the neutral global sentiment. Today, the forint strengthened approximately 0.25% against the euro. A similar move is observed on the EUR/PLN. However, this also shows that the zloty is basically not working-off its losses from yesterday's session and is approximately 0.7-0.8% below its levels from yesterday. Without yesterday's wear-off, the EUR/PLN would most likely be below the 4.30 level in the current global conditions.

A sudden move that weakened the zloty yesterday, may have a negative impact on the PLN for a few next days. However, we can also not exclude that investors will remain nervous until Moody's decision regarding Poland's rating (the 9th of September).