Daily analysis 09.08.2017

Surprisingly strong market reaction to yesterday's data on US vacancies has noticeably strengthened the dollar. The rise in the geopolitical risk has sharply raised the franc's quotes. The Polish currency was in a weaker condition. The EUR/PLN pair has been close to 3-month peaks. The franc has constituted nearly two-week highs.

Macro key data (CET time- Central-European). Estimates of macro data are based on Bloomberg information unless marked otherwise.

• 2.30 p.m.: Unit labour costs in the US for the second quarter (estimates: 1.1% seasonally adjusted, annualised, estimates range from 0.2% to 2.5%).

Strong reaction to vacancies' change in the USA

Morning trading on the forex market has shown significant changes in the main currency pairs in recent hours. It has been the derivative of two market events- yesterday's US vacancy report and the rise in geopolitical tension in the Korean Peninsula.

On Tuesday at 4:00 p.m., the vacancies report from the USA was published. They have risen to 6.16 million (4% of participation) with the forecast of 5.75 million and an estimated range of 5.6 to 5.9 million. It has also been the highest reading for this index since the beginning of research or since 2001. Is it surprising that the EUR/USD has fallen after these readings from around 1.1800 to 1.1720? We definitely think so.

Firstly, the vacancy report rarely attracts major attention. It is due to the fact, that they have been fluctuating in most cases between the range of 5.5-6.0 million for the past 2 years, but they have not significantly affected, for example, the increase in salaries of US workers. Additionally, the report is carried on a small sample (3 times less than "payrolls" and almost 10 times less than ADP readings). This increases the risk that the survey reading may be different from the actual data.

Moreover, it must be noted, that during the summer months there may be problems with proper seasonal adjustment of this figure. In June 2015, vacancies had the worth of 5.45 million. In July, this jumped to 5.9 million and then fell to 5.45 million. A similar situation was noticed a year ago. As a result, this data should most often be considered as minor, although obviously, the demand for work submitted by employers is an important parameter of the labour market.

It is possible, however, that investors, due to the lack of events in the macro calendar, have been more interested in this indicator. Downwards movement on the EUR/USD pair could also be triggered by the falling of the GBP/USD pair to around 1.30. US readings have accelerated the descent of popular cable below this border and have also pushed down the EUR/USD pair. Generally, from a fundamental point of view, the situation of vacancies and their translations into higher wages or inflation has been at this point marginal so it can be considered that the decline has been unjustified.

Increase of geopolitical pressure. Data from the USA

Another element that generated additional volatility on the market has been the increase in geopolitical tension in the Korean Peninsula region. The dollar's reaction has been limited on the one hand, as the currency could be regarded as a "safe haven", but on the other, increase aversion to risk has favoured a fall in the yields on US Treasury bonds and a reduction in the chances of a rate hike.

However, the Swiss franc has reacted very strongly to reports from Asia. Yesterday at 8.00 p.m., the EUR/CHF was in 1.1480, close to several months boundary and in the morning the pair has tested the 1.1270 level. Within a dozen or so hours, the franc has strengthened in relation to the euro by almost 2%. In a sense, this may also be a surprise, as the CHF's global vulnerability has declined for the last few months. The next few hours should, however, show if the geopolitical elements were only a pretext for correcting the recent fall of the franc or whether the Swiss currency has been returning as a measure of risk aversion.

Today's macro calendar, similar to yesterday's one, was theoretically empty. However, taking into account Tuesday's strong response to US vacancies, it is worth noting today's unit data on labour costs for the second quarter of the US economy. This data is characterized by extremely high volatility due to it being analysed quarterly (seasonally adjusted), which is annualized (multiplied by four to simulate the annual change).

The median of surveyed, by Bloomberg, economists has been at the 1.1% level (down from 2.2%). It is worth noting, that the range of estimates has been broad (from 0.2% to 2.5%). In addition, the historical fluctuations of this figure have been enormous. In the second quarter of 2016, the growth was at the 6.2% level, only to drop to minus 4.6% two-quarters later. Theoretically, such variable readings should be ignored, but given yesterday's reaction to the vacancies in the US, the traffic could be stronger than the result of the fundamental message of the publication.

Zloty weaker

Yesterday, the value of the zloty began to fall sharply after the publication of the number of vacancies in the US (details in the previous paragraphs). The EUR/PLN has tested the area around 4.2650 and the USD/PLN has risen from around 3.60 to 3.63. The domestic currency has also noticeably weakened to the forint. The PLN/HUF has fallen to 71.30 and again came close to 5-month lows.

The increase of geopolitical tension during the Asian session has not harmed the zloty, the exception has been in its relation to the franc. Almost 2% appreciation of the Helvetian currency in relation to the European one has pushed the CHF/PLN to 3.77. Generally, the recent hours have shown that the zloty has been very sensitive to the dollar's strengthening and the overall increase in risk aversion. If the situation on the broad market does not improve then it will be difficult to count on paring the recent losses by PLN.