The EUR/USD and the US treasury yields are at Friday's closing levels. The Turkish lira recouped some losses but the TRY remains at all-time-lows to both the euro and the zloty. The Polish currency is fairly stable with the EUR/PLN around 4.31.
Key macro data (CET time - Central European). Estimates of macro data are based on Bloomberg data unless otherwise noted.
- No macro data that can significantly affect the analyzed currency pairs.
The US job market
Investors were quite cautious concerning the US labor data readings. Initial dollar and yields appreciation was quickly reduced. This was primarily a result of some inconsistent data seen in the BLS report.
On the one hand, payrolls dropped according to the establishment survey, but on the other, household surveys showed a significant rise in employment and fall in unemployment.
Significant job losses were mainly seen in the food and beverage sector (105k) despite the average gain in the last 12 months being at 24k. There are likely some restaurants that were still closed on reference day (September 12) and people who possessed these jobs were not counted as employed.
Moreover, the multiple hurricanes might also affect household surveys. There was a strong rise in employment to the population ratio for those holding a bachelor's degree or associate’s degree in September (by 0.4 and 0.3 percentage points, respectively) while during the entire year, this ratio was fairly stable. A different situation was observed from those with an education below the high school level. It dropped by 0.1 percentage point in September, while on a yearly basis it has increased by 1.6 percentage points. The latest survey may have overestimated the number of people with a higher education and therefore pushed wages markedly above expectations (2.9% y/y vs 2.6%). Uncertainty regarding the real conditions of the jobs market didn't allow both the euro and the treasury yields to keep initial gains.
The lira under severe pressure
During the Asian session, market participants were observing significant moves on the Turkish currency. According to Sunday's press reports in the Wall Street Journal, the US Embassy in Ankara stopped issuing nonimmigrant visas to Turks.
At opening, the lira lost around 6% to both the euro and dollar. It also dropped against the all-time-lows to the European currency. The strong slide was reduced when more investors engaged in the trade. However, a drop around 2-3% remained during the first part of London trading. Moreover, the performance of the TRY remains weak. It lost around 15% against the euro this year and it occupies the bottom of the Bloomberg 31 currency table (behind only the Argentinian peso).
Stabilization on the PLN
The EUR/PLN closed on Friday at 4.31. Trading at a similar level is being seen during the first part of the European session. No significant volatility is expected in the following hours as the macroeconomic calendar is empty. The lira situation should not affect the broader EM space as the Turkish situation seems to be isolated. It is also confirmed by the direct PLN/TRY quotes with a reading below the level of parity for the first time in history.
Better than expected industrial production data from Germany should lessen risks from Spanish unity. A fairly good regional sentiment can also be confirmed by the EUR/CHF trading around the 1.1500 level and the CHF/PLN in the range of 3.75.