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Afternoon analysis 27.07.2017

27 Jul 2017 15:08|Marcin Lipka

The EUR/USD pair has returned to around 1.1700. The franc's been the cheapest to the euro since the second half of January 2015. The zloty has gained in the second part of the day, but more visible decreases below 4.25 to EUR/PLN may be difficult for now.

A stronger dollar and a weak franc

Since the midday, the gradual decrease of the EUR/USD exchange rate has been visible. Even before the US macroeconomic data, the main currency pair fell below the 1,1700 level. This may mean, that the response to yesterday's FOMC statement was too exponential. Also, yields of US Treasury bonds rose by 2-3 basis points.

The dollar quotes should also support the macro economic data. Orders for durable goods have increased by 6.5% MOM (estimates: 3.9% MOM). When excluding the most variable element (transport, mainly airplanes), the preliminary reading is 0.2% MOM (consensus 0.4%). However, it is also worth noting that this reading has been clearly revised upward to the previous month (from 0.3 to 0.6% MOM). As a result, given the last two months, the data has been better than expected.

Also, regarding the initial jobless claims, they have remained at a very low level. In the week ending July 22, they amounted to 244,000. In general, the readings have been relatively good and should not contribute to the dollar weakening in subsequent hours.

On our continent, the Swiss currency has been in the middle of changes. The EUR/CHF pair has clearly exceeded 1.1200 (1.1240), which means that the franc has been the cheapest to the euro since the release by SNB the EUR/CHF rate in mid-January 2015. As we have written in our first comment today, the negative trends for the franc should continue.

The zloty has been still under the pressure

Although the EUR/PLN exchange rate has receded from around 4.2650 to 4.2550, the zloty has been relatively weak at the moment. This also has been shown in the PLN/HUF behaviour, which has been still close to its 4 months lows.

Despite the relatively weak condition of the domestic currency, the strong global weakening of the franc has made the CHF/PLN fall to around 3.78-3.79. These have been also the lowest levels since the second half of January 2015. However, there has been a shortage of about 25 gr to the franc's exchange rate for it fell to levels from the "black Thursday" when the SNB has released the EUR/CHF exchange rate.

During tomorrow's session, the GDP readings of the second quarter from the United States will be the most important. The consensus among economists has been close to the Federal Reserve's GDPN model from Atlanta (+ 2.5% QOQ in updated version). Taking into account, that these have been only the initial readings and methodology of the report (updated conceptualization), the risk of distant from consensus publication has been high, and therefore, the currencies' volatility during Friday's afternoon may also be significant.

 

27 Jul 2017 15:08|Marcin Lipka

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

27 Jul 2017 11:56

Daily analysis 27.07.2017

26 Jul 2017 15:06

Afternoon analysis 26.07.2017

26 Jul 2017 12:34

Daily analysis 26.07.2017

25 Jul 2017 15:23

Afternoon analysis 25.07.2017

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