Daily analysis 12.05.2017

A relatively rapid GDP growth in Germany has supported the eurozone’s economic revival. Today’s data from the USA will most likely be neutral for the dollar. The zloty is estimated to remain stable today, regardless of the decision from the Moody’s. The EUR/PLN has been near 4.22 and the franc has remained near the area of 3.85 PLN.

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

• 14.30: The CPI from the USA (estimates: 0.2% MoM and 2.3% YOY; excluding fuel and food: 0.2% MoM and 2.0% YOY).
• 14.30: Retail sales from the USA (estimates: positive 0.6% MoM; excluding fuel and cars: positive 0.4% MoM).
• 16.00: The University of Michigan consumer sentiment index for May (estimates: 97.0 points).

Positive data from Germany

According to Destatis, the German GDP growth for the first quarter was at the level of 0.6% QoQ and 1.7% YOY. The initial estimates do not include particular growth components. Nevertheless, description of the data indicates that this index’s structure was fairly positive.

Destatis suggested that investments have increased strongly. This was partially related to the positive condition of the building sector (mild weather), but also to investments in both machines and devices. Destatis also emphasized that external demand, private consumption and government expenses were positive for the reading as well.

It’s also worth noting that the annual GDP data from Germany includes the impact of business days. If it wasn’t for the calendar effect, the growth would have reached the level of 2.9% YOY. This reading may also be a certain hint for the GDP growth from Poland, where the analyses do not take the calendar effect into consideration.

Limited impact of American data?

This afternoon, we will receive a few readings from the US economy. Theoretically, all of them could be crucial. However, their impact may be fairly limited, because one month is definitely not enough to overcast a negative impression after the first quarter. Nevertheless, if the data is disappointing, some investors will most likely blame it on seasonal factors.

It’s also worth noting that impact of the CPI data is limited in general. This is because the Federal Reserve use the CPE data in their forecasts. As a result, a slight inconsistency with the consensus (2.0% YOY; excluding fuel and food) could be ignored by the market. Only a more significant decrease in baseline inflation (down to 1.8% or below that) could overvalue the dollar. However, this scenario is very unlikely.

Investors have also been sceptical towards retail sales. This is because it has remained uncertain whether the temporary slowdown is over, or was the previous poor work-off a result of slightly worse readings during winter. Therefore, the data would have to be clearly inconsistent with the consensus, in order to cause significant consequences for the dollar.

Zloty has been stable before rating

The zloty has been fairly stable. Both the euro and franc remain near their yesterday’s levels. Moreover, today’s data from Poland and from the USA will most likely have a minor impact on the zloty.

This evening, Moody’s is expected to publish a preview of Poland’s rating, which currently is at the A2 level with a negative perspective. The most likely scenario includes leaving both of these parameters unchanged. This will be neutral for the PLN.

There is also the positive scenario, which includes raising Poland’s perspective to neutral. This would support the zloty, but the positive market sentiment has limited space for a sudden appreciation. Even the negative scenario of a downgrade to the A3 level, which is fairly unlikely, would cause a limited reaction. This is because the short-term economic perspectives remain positive and the foreign wallet capital is received by countries with a lower rank.