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Calm situation in the market (Daily analysis 30.03.2018)

30 Mar 2018 12:20|Marcin Lipka

Slight changes in currency during pre-holiday trading. The Turkish lira is paring some of the recent losses, but imbalances in the market remain serious. The zloty remains stable. The EUR/PLN pair close to the 4.21 boundary.

The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.

  • A lack of macro data may noticeably impact the analyzed currency pairs.

Calm at the end of the week

Yesterday, we pointed out that data from the United States is unlikely to cause significant movements in the currency market. This was a result of the increase in the PCE's core inflation by only 0.1 percentage points year-on-year to 1.6% year-on-year, which was in line with the economists' consensus. Other readings (e.g. historically low values of new claims) were interesting from a statistical point of view but they do not change the approach towards future interest rates in the US.

Today, the main markets are closed and there are practically no macroeconomic data. This means that the market will wait for next week's readings when the ISM data in the United States or March's publication of the Department of Labour on new payrolls and the level of wages in the USA will be published.

Some troubles in the Turkish economy

On Thursday, the Turkish statistics office announced that GDP data for Q3 and Q4 of 2017 had been revised upward. This shows that the economy was growing at a pace of 11.3% year-on-year and 7.3% year-on-year respectively. In Turkey as a whole, GDP grew by 7.4% last year.

Today, at 10:00 a.m., Turkstat published data on the foreign trade balance. In two months time, the deficit on the goods account amounted to 14.8 billion USD. This is 83% more than in the analogous period of last year. Moreover, the value of Turkish imports is 60% higher than that of export. This generates strong pressure which depreciates the currency, especially when the global sentiment is worsening. The capital that will finance this imbalance will need higher risk bonuses, which will be reflected in the local currency's exchange rate. Double-digit inflation and an accommodative monetary policy that worsens Turkey's economic imbalances are still a burden for the TRY.

No changes for the zloty

The situation on the Polish currency, similar to the one observed on the broad market, is calm. Most of the transactions are executed at a level close to 4.21 PLN per euro. There is the limited risk that the situation will change significantly in the coming hours.

The beginning of next week shouldn't be volatile due to the limited amount of macroeconomic data. On Monday most of the market will function normally so the signals from the foreign share market or bonds may disturb zloty quotations to some extent. However, trade close to current levels remains the core scenario.

30 Mar 2018 12:20|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:

29 Mar 2018 15:52

No serious surprises (Afternoon analysis 29.03.2018)

29 Mar 2018 12:31

Dollar continues to go up (Daily analysis 29.03.2018)

28 Mar 2018 15:32

The US GDP surprises (Afternoon analysis 28.03.2018)

28 Mar 2018 12:39

Exchange rates remain stable (Daily analysis 28.03.2018)

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