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Daily analysis 17.02.2017

17 Feb 2017 12:24|Marcin Lipka

Investors are anticipating changes in the American tax system. Very negative data from the United Kingdom wear-off the pound globally. The zloty’s quotations are lower before significant readings from the Polish economy. Crucial data regarding the building production.

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

  • 14.00: Retail sales from Poland (estimates: 7.7% YoY).
  • 14.00: Industrial production from Poland (estimates: positive 8.1% YoY).
  • 14.00: Building production from Poland (estimates: negative 1.7% YoY).
  • 14.00: Changes in the producer prices from Poland (estimates: positive 3.7% YoY).


Positive macroeconomic data from the USA, as well as relatively hawkish statements from the FOMC representatives, didn’t manage to strengthen the dollar. Moreover, profitability of the two-year treasury bonds has recently been pushed to the area of 1.18%. This is 8 base case points less than on Wednesday.

The main reason for this behavior is most likely the market’s doubts regarding the pace of potential changes made by the American administration. The majority of investors are not sure when they can expect a decrease in taxes in the USA. Will the fiscal stimuli be announced relatively quickly? How will the works on corrections regarding the border tax undergo? We should emphasize that the market is negative towards these corrections. Moreover, the opinion from President Donald Trump regarding this topic remains unclear.

However, changes in the American tax system remain likely. This was the most crucial economic element of the election campaign of both Donald Trump and the Republicans. However, the ideas of implementing the border tax and increasing expenses, may cause more problems. However, even if export is supported in a different way and there is a slight delay in infrastructural investments, both of these changes would be positive for the dollar, at least in the mid-term (a few quarters).

Very weak data from UK

This morning we received fatal data from the United Kingdom for January. The retail sales index was at the level of negative 0.3% MoM (negative 0.2% MoM, excluding fuel). Moreover, the data for December was revised down by 0.2 percentage points. As a result, the retail sales index in the Year over Year interpretation only increased 1.5%. This is its lowest reading in more than three years. It’s worth emphasizing that this index was above the level of 7% YoY in October. Moreover, its thirty-six-month average was at the level of positive 4.5% YoY.

These readings caused the pound to decrease significantly. This morning, the GBP/USD was at the level of 1.25 and decreased to the area of 1.24 shortly before noon. This data may show that increasing inflation, as well as decreasing pace of the salary growth, decreased purchasing power of the consumers significantly. Therefore, they have reduced their expenses.

Additionally, the dovish members of the Bank of England may consider this data as an argument in favor of postponing potential changes in the monetary policy. The market will now observe, whether negative retail sales data will translate to a worse situation in the labor market. The British employment data has been record high so far. If this situation changes, investors would relate these events to Brexit. This would be negative for the pound.

Zloty is weaker

There was no macroeconomic information that would justify the zloty’s clear depreciation. The EUR/PLN tested the area of 4.33 and the dollar reached the level of 4.07 PLN. The zloty was weak against the forint as well. The PLN/HUF was pushed to the area of 71, which is its lowest level in more than three weeks.

It’s likely that investors were anxious regarding macroeconomic readings from Poland this afternoon. However, the Polish data has been positive recently. Therefore, the PLN depreciation was quite surprising. The Polish Central Statistical Office (GUS) will present the readings at 14.00 (retail sales, production, inflation). The data regarding the building production will be the most significant in our opinion. If this index goes above zero (estimates: negative 1.7% YoY), this should be interpreted as an increase in investments, which is crucial for the GDP growth to go above 3% this year. However, the Bloomberg consensus shows a huge dissonance in economic forecasts regarding the industrial production (between negative 17.7% YoY and positive 12.7% YoY). This goes to show how large the uncertainty regarding today’s readings is. However, this does not excuse such an intense wear-off of the zloty.

17 Feb 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:

16 Feb 2017 15:14

Afternoon analysis 16.02.2017

16 Feb 2017 12:21

Daily analysis 16.02.2017

15 Feb 2017 15:12

Afternoon analysis 15.02.2017

15 Feb 2017 12:22

Daily analysis 15.02.2017

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