Consumers in the US will bear the burden of high economic growth (Afternoon analysis 20.12.2019)

Data from the USA confirm the positive climate of American consumers. The dollar is appreciating today, but this has no negative impact on the zloty's basket. The EUR/USD exchange rate drops to about 1.1080 an hour from the start of the trading session on the New York Stock Exchange.

The Americans are getting rich faster than the economists' estimates

Even before the session began on the New York Stock Exchange, the dollar appreciated, and there were further strong growths in the equity market. This is to some extent a continuation of the trend we have seen in recent days, but also due to the slightly better than expected US GDP data in Q3. The third reading of the Bureau of Economic Analysis (BEA) of the economic growth indicated, in line with the previous reading, an annualised rate of 2.1% quarter-on-quarter. However, the largest component, i.e. private consumption, positively surprised, increasing by 3.2% quarter-on-quarter, by 0.3 percentage points above the previous reading and market expectations.

Around 4:00 p.m., there were published data that were also clearly better than expected. According to BEA data, Americans' private income rose by 0.5% on a monthly basis in November, although it was expected to rise by 0.3%. The October data were revised upward by 0.1 percentage points. The 0.4% increase in private spending (which includes spending on services) turned out to be in line with expectations, although in real terms it was already 0.1 percentage points higher than expected. The final reading of the US consumer sentiment index in December was also published by the University of Michigan. The change compared to the preliminary reading was not in line with expectations, but it also exceeded the consensus by 0.1 percentage points, rising to 99.3 percentage points, the highest level since May.

Today's macroeconomic data show one thing: the average American consumer is still in a very good financial situation. This reinforces the argument that US consumers will be able to bear the relatively high growth of the US economy and that the likelihood of a slowdown which may happen faster than expected is currently very limited.

Today's macroeconomic publications supported the dollar, although the dollar's appreciation was not as high as expected. The final response may only come later or even move to the next week. The EUR/USD quotations fell to about 1.1080, which was the lowest level since December 11th, but a fall towards about 1.1050 seems likely. However, fundamental changes are not to be expected until inflation in the USA shows an upward trend, which may provoke a discussion about the return of monetary tightening or increase its probability.

Strengthening dollar does not depreciate zloty

Despite the slightly stronger dollar today, which generally has a negative impact on emerging countries' currencies, the zloty remained stable. The Polish currency was also supported today by a higher than expected increase in retail sales in November, which may also suggest a relatively good condition of Polish consumers. The EUR/PLN exchange rate continues to oscillate around 4.26. A relatively strong dollar's appreciation could weaken the zloty somewhat, although the changes would not be rather profound given the recent series of positive data from the Polish economy (not only sales) and positive market sentiment (again, new records of major US market indexes).