Before the session on European markets started, a set of data from the Chinese economy for July was presented. They are important as they may indicate what the situation in other countries will be like in a few months' time, given that China came out first from the closure after the wave of the coronavirus.
Consumers are not eager to spend money
In the Chinese economy, the increase in activity is still fuelling the industrial sector, which grew by 4.8% annually. This was 0.4 percentage points below market expectations, but this may not be the main concern. More importantly, it seems that retail sales have once again failed. For the second month in a row, the median of economists' expectations showed an increase, this time by 0.1%, but we also received a decrease for the second time in a row. Retail sales in July contracted by 1.1%, still remaining far from the pre-pandemic levels of about 8% growth.
It may also cast a little shadow over the path of rapid activity growth and recovery from the recession, given that consumer demand, indirectly reflected in retail sales data, is returning noticeably slower than the supply side, which was much easier to recover.
Eurozone as expected, Poland slightly exceeds expectations
Eurostat has published a reading of the eurozone GDP for the Q2 of this year. The data were in line with expectations. The GDP of the single currency area has contracted by 15% per year and by 12.1% per quarter.
The data from Poland turned out to be slightly better than expected. The GDP decreased by 8.2% annually and 8.9% quarterly in the Q2. These values are another factor contributing to a positive outcome for the zloty. The basket of the Polish currency has not changed much today. Today, the EUR/PLN exchange rate moved just under 4.40, while the USD/PLN exchange rate was about 3.72.
Will data from the US bring some changes?
On the currency market, today's data from China and Europe have made a limited sensation. The EUR/USD quotations continue to oscillate around 1.18, which is practically in line with yesterday's closing level.
In the afternoon, data on retail sales and consumer confidence in the USA will be available. The impact on the economy will be revealed by the fact that some US cities and states have reintroduced restrictions in fear of an epidemic. The range of currency fluctuations may increase at the time of publication.