Daily analysis 30.08.2017

Improvement in market's sentiment gives a moment of break to the dollar. However, its fluctuation can be observed this afternoon due to scheduled publications. After paring some losses yesterday, the Polish currency was in slightly weaker condition during morning trading.

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

• 2.00 p.m: August's consumer inflation (CPI) in Germany (estimates: 1.8% YOY; previously: 1.7% YOY),
• 2.15 p.m.: August's employment change in private sector in the US - ADP (estimates: 183k; previously: 178k),
• 2. 30 p.m.: the US GDP growth rate in the second quarter- annualized (estimates: 2.8% YOY; previously: 2.6% YOY).

Better sentiment on the market

Yesterday afternoon, the scenario of strengthening the main European indexes' decline wasn't fulfilled. In the afternoon, the geopolitical fears, which worsened the market's sentiment in the first part of the day, were reduced. Increases demand for riskier assets has made a positive day for the main US stock, and a part of previous gains has been returned from so-called "safe harbor", i.a. gold, the yen or the franc.

Today, this trend was continued during the morning trading. The dollar appreciated - the price for one dollar surpassed 110 yen, and for one euro fell below 1.20. As a result, the dollar index (DXY) rose to 92.5 pts today - the highest level since Friday. It should be noted, that despite the rebound in the US currency depreciation from recent days, it is still subject to significant pressure.

Later in the day, the dollar's fluctuation may still increase significantly. Even before the start of the New York Stock Exchange session, ADP data on employment in the US private sector will be published. It may suggest to investors what the job change will be in the official Labor Department report, which will be published on Friday.

On the other hand, a quarter an hour later (2.30 p.m.), data on US GDP growth in the second quarter will be released. Although this is another reading, previous quarters have shown that they can deviate both, from initial data and consensus. Therefore, in connection with the aforementioned ADP data, the dollar's quotes may be subject to considerable fluctuations around the time of the publications, especially if they differ significantly from consensus.

However, the final effect, positive or negative, on the dollar seems to be limited. In the next two days, PCE price index data and the labour market report will be published. Market participants may, therefore, approach cautiously to today's data and wait until Friday when all data from this week will be known.

Therefore, the largest response can be expected on Friday - the dollar's trading in the coming weeks may depend on Thursday's inflation data and Friday's US labour market report.

The slightly weaker zloty

Yesterday afternoon, the zloty incurred most of the losses due to sentiment deterioration. Despite the better mood on the market today, the zloty was in a bit worse shape and lost to the main currencies. The fluctuation range, however, has been relatively limited and it fits within the observed in recent days range.

For the polish currency valuation, data from the US economy will also be relevant. In the case of positive market's reaction to it and strengthening of the dollar, as a result, the zloty could depreciate. Therefore, probably by Friday, fluctuations in the zloty's exchange rates will be limited to those from the last few days, while the USD/PLN pair may react in the strongest way.