Calm quotations (Afternoon analysis 12.02.2018)

After Friday's quotations, when significant fluctuations and extreme changes in sentiment were observed, stabilization took over the market. Monday's changes in the currency market were very limited and the situation may continue until Wednesday.

Stabilisation on the market

The positive sentiment on the European market (main indexes were growing by about 2%) combined with a lack of further dollar appreciation have calmed down the market for the moment. Today, the main pair's quotations, i.e. EUR/USD pair, moved in a relatively narrow range of 1.223-1.229. The relative calmness of the market also reduced the pressure on emerging market currencies, including the zloty.

The EUR/PLN quotations fell from 4.18 to about 4.175, while on Friday the euro was more expensive by 0.03 PLN. Zloty value in relation to the dollar, the franc or the pound remained stable and exchange rate fluctuations were also limited today. This situation is likely to continue for the rest of the day, taking into account the empty calendar of macroeconomic publications in the following hours.

Stabilisation on the currency market will last to Wednesday. Until then data will be published, which can significantly affect both the broad market and the zloty. Data on inflation and GDP in Q4 in Germany, GDP and industrial production in the eurozone, as well as data on GDP for the last quarter in Poland will be published. The aforementioned data could trigger significant movements in the currency market, although data from the US may be crucial.

In the afternoon January's data on consumer inflation in the US economy will be released. It can have the greatest impact on the currency market. It seems that the core inflation rate, already higher by 0.1 percentage points from 1.7%, could have pushed the dollar into the upward trend. Exceeding the 1.8% would mean the highest level since April 2017 and could trigger a sharp rise in dollar value, which would have a negative impact on the entire zloty basket.

Tomorrow’s preview

Tomorrow at 10:30 a.m., the most important publication will be released by the Office for National Statistics (ONS) on January's consumer inflation (CPI) in the British economy. The market consensus suggests a reading of 2.9% (yearly). This would be 0.1 percentage points below December's publication and at the same time, the lowest level since August - between September and December inflation was in the 3% - 3.1% range. However, the core reading (excluding energy and food prices) may prove more important as it is expected to increase by 0.1 percentage points to 2.6%. Given the latest Bank of England statement, a reading exceeding the consensus by 0.1 percentage points could slightly strengthen the pound. On the other hand, its increase to 2.8% would mean the highest level in 6 years and could cause a clear pound appreciation.

The National Bank of Poland (NBP) will present December's data on Poland's current account. For the previous two consecutive months, the NBP recorded a surplus on the account (for the first time since mid-2016). The market expectations indicate a deficit of 230 million EUR in December (compared to the 233 surplus in November). Another positive reading could, in theory, be positive for the zloty, although external factors (such as the dollar's behaviour, Treasury bonds or sentiment on the global market) could still have a much greater impact on its quotations.