Daily analysis 08.03.2016

Disturbance of macro data – record weak publications from China, and very good readings from Germany. The Brent oil is 50% higher than during its pits in January. The EUR/PLN is approximately 0.01 PLN above yesterday's quotations.

Most important macro data (CET – Central European Time). Estimations of macro data are based on Bloomberg information, unless marked otherwise.

• No macro data that could have a significant impact on the analyzed currency pairs.

Chinese and German data

The data from China attracted much attention during today's session. Recently, the market was very focused on the exchange rate of the renminbi, the actions of the People's Bank of China, and Beijing's economic plans. Thus, the information that in February the Chinese export expressed that the renminbi decreased by more than 20% y/y (the fastest depreciation since 2009), caused certain anxieties.

Theoretically, such a significant decrease in foreign demand for the given country's products could suggest one out of two things. It is either significant economic problems of countries which import Chinese products, or a clear deterioration in Beijing's competitiveness. However, it is worth noting that a serious disturbance in data, is caused by a movable date of the Chinese New Year.

The fact that the date is movable (January or February), and the official celebrations take seven days, causes the data from the beginning of the year to be unclear. Thus, even year on year readings, which usually eliminate most seasonal fluctuations, are unreliable. This can be observed in previous publications. In February 2015, export increased 48.9% y/y, and in February 2014 it decreased 20.4%. Some unreliable changes can be observed in the months before, or after the Chinese New Year.

In March 2015, export decreased 14.6%. As a result, the data from the current month is also most likely to be burdened with a significant error. Moreover, it is worth noting that the data of the Chinese trade is very often expressed in dollars. This shows their few-percent decrease, which continues for many months. However, it is worth noting that the USD has gained definitely to the emerging markets currencies, and also to the renminbi. As a result, the export volume may be flat, despite the fact that it is shrinking significantly when expressed in the dollar.

Thus, we should not jump to too many conclusions because of today's reading. On the other hand, the global demand seems to not grow, due to a lower consumption of the raw material countries, or a weaker than expected economic development of the developed countries.

Today's publication from Germany can be considered slightly positive. The industrial production of this country did not increase in y/y relation since September 2015, and January it decreased 1.3% y/y. This could be an actual signal that the economy may clearly slow down. However, today it appeared that the production (excluding the construction and energy sectors) increased 2.2% y/y. The construction sector alone increased 7.0% y/y.

This signal will probably not be sufficient enough to decrease expectations regarding the ECB extending the QE program, and decreasing the deposit rate. However, it may suggest that a deterioration in the economic sentiment (indicated by the Ifo and ZEW among others) will not happen. This information would be positive also for Poland.

Oil increases 50% against its minimum

On January 20th, the Brent oil reached the level of 27.10 USD, and yesterday it exceeded the limit of 41 USD. This means an increase by more than 50%. The agreement regarding the freezing of production, remains the main catalyst of the growth. It will be signed by the leading oil exporters this month. Moreover, evaluation of raw materials is improved by a better global sentiment, and a reduction of financial investors' positions, assuming a depreciation of the Brent or WTI.

An increase in prices of raw materials also strengthens the currencies of countries exporting them. During one month, the Russian rouble gained 10% against the dollar, and approximately 20% since the record pits from January. Purchase of raw materials currencies and their strengthening against the dollar, may partly be a result of a quite weak global condition of the American currency, despite the chances for raising interest rates to grow. The probability of the Fed increasing interest rates in June went up to 46%, and yesterday the profitability of the American 2-year treasury bonds reached 0.9%. Thus, in general this is favorable information for the USD.

Stabilization continues

A slight deterioration of the global sentiment, along with an increase in the EUR/USD, cause the euro to gain approximately 0.01 PLN against the zloty. However, the trade within the central area of the range 4.30-4.35, remains the base case scenario. There remains an element of uncertainty for this week's meeting of the ECB.

However, if Mario Draghi and his associates decide to conduct changes in the monetary policy, which are consistent with the consensus (we wrote more about this yesterday), or the monetary easing is slightly more aggressive, the EUR/PLN should remain in the above mentioned range of fluctuations. Limited changes on the pound, franc, and dollar are also anticipated within the forthcoming hours.