Data from Germany surprised (Daily analysis 27.08.2018)

The symposium in Jackson Hole did not evoke any major changes in the broad market. Finally, good data from the German economy - a strong growth of the Ifo index. The zloty remains stable - at the level of 0.02-0.03 PLN below the 4.30 for the euro.

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

• A lack of macro data may noticeably impact the analyzed currency pairs.

Fed does not send more impulses

The speeches by central bankers in Jackson Hole did not cause significant changes on the currency market. An official presentation of the Federal Reserve Chairman, Jerome Powell, omitted the recently discussed issue of the Fed's independence (after expressing President Trump's dissatisfaction with further increases in US interest rates). As a result, it was considered to be dovish.

The presentation was balanced and included both historical developments (an incorrect assessment of economic conditions in the 1970s and, for this reason, high inflation, as well as the proper management of monetary policy in the 1990s) and a number of other factors. In general, Powell also suggested that we should not focus on individual indicators (e.g. neutral unemployment rate or interest rates), but perceive it in a broader light (e.g. productivity or anchoring inflation expectations). Powell had also an illustrative argument for the supporters of faster monetary tightening, saying that "if you are not sure what reactions your actions may trigger, then you should be more conservative". This may suggest that FOMC would be closer to a slowdown in monetary tightening than to an acceleration.

However, we should not have any doubts what FOMC will do in September (the increase is practically a foregone conclusion). Moreover, there is a good chance that monetary policy will be tightened further in December. The next FOMC meeting is only one month from now and we will probably have a clearer view of the monetary tightening path for 2019. Till then, there should also be clarity about extending the customs conflict with China (probably by the end of next week).

Finally good data from Germany

After months of unexpectedly weak data from the eurozone economies, the market is finally getting a positive signal. The German Ifo Index, which measures business climate, has noted a serious increase. Currently, it amounts to 103.8 points, while the forecasts for this month and the July reading were slightly below the 102 pts limit. Today's publication is also the best since March this year.

The improvement of manufacturing production, where after six consecutive months of declines we finally had better moods, may be particularly good news. Moreover, the aggregate sub-index of expectations (for wholesale and retail trade, construction and industry) was also above expectations and recorded a strong rebound from 98.2 pts in July (over two-year lows) to 101.2 pts, which is the highest value since February. Better sentiment among entrepreneurs was caused by both the improvement of the situation within the country and the "truce in the trade conflict with the USA" said Clemens Fuest, President of the Ifo Institute. Although one swallow doesn’t make a summer, today's Ifo could be a signal that the second half of the year in the eurozone will not be as bad as it was feared. It is also good news for Poland and for the zloty.

No significant changes in zloty

The zloty remains stable during the morning trade. The EUR/PLN pair is moving in the 4.27-4.28 range. The Polish currency is stabilised by a neutral message from FOMC (not only Powell's but also from other Fed members' statements) and good data from the German economy, which increase the chances of maintaining a decent economic situation in Poland in the coming months.

The Polish currency, like global markets, has become resistant to negative information from Turkey. Today, after a week-long break, the markets on the Bosphorus have opened up, which resulted in the lira weakening by almost 4% in relation to the dollar (USD/TRY reaches the 6.2 level). In general, the base scenario is the stabilisation of the zloty's quotations, and the biggest threat in the coming days is probably the risk of expanding the trade war between the US and China (the decision on additional duties on Chinese goods imported by the United States is to be taken by September 6th).