Daily analysis 27.09.2016

The market’s reaction indicates a Democratic victory of the presidential debate yesterday. However, a significant uncertainty regarding the American elections result will remain until election day. We still haven’t received any specific information from Algeria. The zloty benefits from a better global sentiment and the EUR/PLN went below 4.30 this morning.

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

• 15.45: Initial PMI index from the American services sector (estimations: 51.2 points).

Debate was not inevitable

The behavior of the Mexican currency leaves no doubt who was victorious in the first presidential debate in the USA. The peso gained approximately 2% against the dollar in comparison to quotations from before the Clinton-Trump debate. The result is also clear according to the press. The Polish Press Agency entitled its bulletin, “Trump lost to Clinton in the first debate – commentators’ opinion.”

Theoretically, the above conclusions are also confirmed by the phone survey from CNN ORC International. Clinton won according to 62% of respondents, whereas 27% indicated a Trump victory. However, looking at this result, as well as at the history, we may come to a conclusion that yesterday’s debate is basically meaningless. Moreover, the market is also likely to come to a similar conclusion soon.

Primarily, the sample group participating in the CNN survey only consisted of 521 people. Secondly, only 26% of the respondents have identified themselves as Republicans (41% were defined as Democrats and 33% were defined as independent). Another significant element is that before the debate, CNN asked the same sample group about the result. The Democratic candidate was indicated by 58%, and 32% voted in favor of the Republican candidate’s victory. With an attitude and sample group such as this, it would be difficult to expect a different result.

A different matter that significantly reduces the real impact of yesterday’s debate are the historical results of the CNN surveys. In 2012, Romney won his first debate against Obama (67% vs 25%). He was also victorious in their second debate. However, as we know, it was Obama who eventually became the President of the United States.

The CNN survey also indicates that Trump’s failure regarding two out of three debate topics wasn’t significant. In the “economy” topic, Trump lost to Clinton in a 47% vs 51% relation. In the case of “terrorism” topic, Clinton won 54% vs 43%, while in the “foreign affairs” topic she won 62% vs the 35% that Trump earned.

The above information will be analyzed to a larger degree. Therefore, the market’s reaction may be relatively short-term. Moreover, if we look at the median from the recent surveys (for the entire population) by RealClearPolitics (RCP), we see that Clinton’s advantage is at the level of 2.3 percentage points. When converting this to electoral votes, Clinton would get 188 votes and Trump would receive 165 votes. However, there are still 185 votes left and it’s impossible to assign them to either candidate.

As a result, investors will probably realize the relatively minor impact of the debate. Even if Clinton appears to be better in the next two debates, the surveys will most likely continue to indicate a result which is near draw until election day. In the end, it’s also worth noting that the market still has Brexit in mind. Despite that there was a significant involvement of different methods, it wasn’t until the final results that the actual sentiments were revealed.

Oil and PMI

We continue to anticipate specific information from the OPEC meeting in Algeria. However, we will most likely receive them on the last day of the summit. We still don’t expect these discussions to bring any specific results. Moreover, the only specific information may be that these discussions will be continued during the Cartel’s meeting in November (more in analyses from yesterday).

The coming hours will bring the PMI reading from the American services sector. Of course, it’s less significant than the similar ISM index. However, its nearness to the 50 point level, as well as the recent negative results of accelerating indexes, increase the risk that the data may be unfavorable for the economy.

Zloty slightly gains value

The Polish currency slightly gained value before noon. This may be partially due to the Trump-Clinton debate. However, this event is more significant for the Latin American currencies. It also seems that investors are becoming aware that hypothetical changes within the Ministry of Finance will have a relatively minor impact on Poland’s fiscal policy.

As a result, the EUR/PLN went back below the 4.30 level. Our scenario, which assumed the EUR/PLN will be within the range of 4.25-4.30 after the Federal Reserve’s meeting, is beginning to confirm. Once the situation regarding the Ministry of Finance is solved, the EUR/PLN should begin its quotations in October from the above mentioned range.