Ви отримали нашу картку від фонду?

Ви отримали
нашу картку від фонду?

Додайте її до свого профілю, щоб стежити за отриманими коштами.

Додайте її до свого профілю, щоб стежити за отриманими коштами.

Daily analysis 11.09.2017

11 Sept 2017 12:24|Marcin Lipka

Slightly lower than expected losses after Hurricane Irma are likely helping the dollar and US Treasuries yields. ECB on the impact of the exchange rate on inflation. Comments by Eryk Lon from MPC (the Polish Monetary Policy Council) on the possibility of lowering interest rates that could weaken the zloty. In the morning, the EUR/PLN tested the 4.25 boundary.

The most important macro data (CET - Central European Time). Macro data surveys are based on information from Bloomberg unless noted otherwise.

  • No macroeconomic data which may significantly affect the analysed currencies.

Hurricane Irma and Korea

During the weekend, investors mainly watched the trajectory of Irma's movement. As it turned out, the destructive power of this natural disaster passed by the most populated and industrialised eastern part of Florida and headed further toward the west. Therefore, the losses caused by Irma will be significantly smaller than Friday’s forecast.

This allowed us to open forward contracts on US stocks just above Friday's close. Higher yields on US Treasuries (those of maturing in 10-years by about 3 basis points) are also higher, which translate into a slightly increased chance for interest hikes by the Fed. The observed movements, however, have been relatively limited and it is still very difficult to say to what extent the economic activity in the southeastern United States will be disturbed and how this will affect macroeconomic readings across the country.

The dollar's appreciation in relation to the euro has been small but the USD/JPY or the USD/CHF pairs have been slightly higher as a result of the overall decline in risk aversion after a quiet weekend. This is in context of the Korean peninsula. More movements can be seen in the afternoon, even with the absence of important macroeconomic data from the US. If optimism returns to US markets, then yields may accelerate in the case of growth and would help the dollar.

The ECB on the exchange rates' impact on inflation

In the morning, the ECB member Benoit Coeure had a speech on monetary policy transmission channels in normal times and during the crisis. The significant part of his speech was devoted to the exchange rate issue.

The document presented by Coeure shows that in the times of relatively strong economic growth the impact of exchange rates on inflation is limited. The graph indicated in his speech presents that for the nearest quarters (in non-cumulative terms) the recent appreciation of the euro will reduce the core inflation by 0.02 percentage points quarterly for about three years.

Therefore, it may indicate that this is not an impact that radically changes the perspective of monetary policy that is run by the ECB. As a result, it is unlikely that the euro's current exchange rate will cause more nervous movements of the central bank. This, in turn, reduces the risk recent gains' rebound in relation to the euro, at least in the context of hypothetical actions on the part of the ECB.

Eryk Lon from MPC on the zloty and interest rates

The session on the zloty started quietly. The EUR/PLN rate at the market opening in Europe was close to the 4.24 boundary and the franc, with the slightly better global sentiment, dropped to 3.7150. However, the situation changed after Eryk Lon (member of the Polish Monetary Policy Council) statement was sent to the PAP.

The MPC representative stated that "perhaps in the coming months there will be a need to soften the Polish monetary policy. I am thinking in a more intensive way about the perspective of cutting the NBP interest rate by 50 basis points." Lon mentioned several arguments that, in his opinion, support the reduction. These are: "the strong strengthening of the zloty's exchange rate," "insignificant investment capital dynamics," or low interest rates in Hungary and in the Czech Republic. The MPC member said, as the PAP reports stated, that, "in the future, it would be justified to intervene in the foreign exchange market, which would weaken the zloty's exchange rate."

The Council representative's comments caused the EUR/PLN pair to appreciate above the 4.25 boundary. They are surprising due to the fact that the market is currently trying to guess the moment of interest hike rather than its reduction. Despite Eryk Lon's earlier more dovish approach to the monetary policy, it was difficult to expect that he would consider cutting interest rates now. On the other hand, there is little chance for such a proposal to find a broader support in the MPC. Therefore, the reaction on the zloty should be rather temporary.


11 Sept 2017 12:24|Marcin Lipka

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

8 Sept 2017 15:10

Afternoon analysis 08.09.2017

8 Sept 2017 12:42

Daily analysis 08.09.2017

7 Sept 2017 15:08

Afternoon analysis 07.09.2017

7 Sept 2017 12:52

Daily analysis 07.09.2017

Attractive exchange rates of 27 currencies