Daily analysis 19.06.2017

Better sentiment seen in Europe as Macron’s party won the election. The currency market saw relatively low volatility this morning as EUR/USD oscillated around 1.12. Investors await the data regarding the Polish economy, although their impact could be limited.

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

• 14.30: Average earnings growth in the corporate sector (estimate : 4.9% YOY; previous : 4.1% YOY)
• 14.30: Employment growth in the corporate sector (estimate: 4.6% YOY; previous : 4.6% YOY)

Sentiment in Europe was higher

The European stock markets were higher by approximately 1%, as the visibly better sentiment present was most likely caused by Emmanuel Macron’s party winning the French parliamentary elections. Investors perceive Macron’s win, both in the presidential and parliamentary elections, as a chance for more stability for both the eurozone and the European Union and also for France to stimulate its growth.

Besides the aforementioned election results, there were no important events planned for today that could influence the currency market. The range of main currency trading today was relatively limited – EUR/USD traded in a narrow range between 1.118 and 1.121. The better sentiment on the market also translated into to a slightly worse condition of the yen and gold, typically considered as “safe havens” that quite regularly lose value when there’s an increased demand for riskier assets.

Contrary to the previous week, there are no important events planned for the coming days. Besides the potential influence of political factors, especially coming from the US or the UK, Friday’s publication of the June PMI indexes could slightly increase volatility. The indexes for the eurozone (including Germany and France) and the US will be published. Median market expectations point toward the indexes for the euro area to slightly deteriorate and for the US market to marginally improve (although in the case of the US, ISM data are considered more important).

No major changes in the case of PLN

After a relatively rapid weakening of the zloty on Thursday after the Federal Reserve’s statement regarding the monetary policy in the US (published at 8 p.m. CET), Polish currency exchange rates against major currencies were close to pre-statement levels. EUR/PLN traded around the 4.21 level, CHF/PLN close to 3.97, while USD/PLN moved between 3.76 and 3.77. It was quite consistent with EUR/USD movements – the pair moved back to 1.12, i.e. to the level before the inflation report and Fed statement which increased the dollar’s volatility. However, the zloty could still be sensitive to changes in the dollar – its strengthening could cause the Polish currency to lose value.

At 2 p.m., the Central Statistical Office (GUS) will publish data regarding average earnings and employment in the corporate sector in May. The average wage growth in recent months was slightly above 4% year-over-year and employment increased by 4.5% - 4.6% YOY between January and April. The market consensus suggests that average earnings will grow by 4.9% YOY and employment by 4.6% YOY. However, the impact of this data on the Polish currency will probably be limited. The zloty should remain in a relatively good condition due to better sentiment present on the European markets.