In the morning hours of Friday's trade, slightly weaker market sentiment was observed. The main European market indexes were falling to about 1%, while the dollar gained slightly with a drop in the yields of Treasury bonds in Europe (with the exceptions of, among others, Italy and Switzerland, which increased in the morning). The market is still processing yesterday's set of data from the US labour market.
The report revealed, among other things, data on stronger-than-expected employment growth, a higher-than-expected rate of professional activity and a lower-than-expected unemployment rate. It was a positive stimulus for the market. On the other hand, however, information was received about new outbreaks of coronavirus and restrictions imposed in some US states.
Extra points for the Old Continent and the euro
Looking at the whole picture, Europe is currently coping better with the coronavirus pandemic than the US. Although the disease reached the US later, countries on the Old Continent are now in the process of opening economies and extinguishing small outbreaks of the virus. There are no more large waves of the disease, as in some regions of the USA. This is also something that can, at least in the short term, keep the euro in relatively good condition against the dollar.
Today IHS Markit published the final readings of the June PMI for the eurozone services sector. These turned out to be slightly better than the initial readings, with the exception of Italy. Interestingly, they were not minor shifts, as is often the case with the final data against the preliminary ones. The PMI for services for the eurozone was 1 point higher than initially estimated and amounted to 48.3 points, and if we combine this with the services sector, it gives an aggregate activity index of 48.5 points.
It is still a recession area, but very close to the 50 point mark, which is the starting point for the increase in activity and a reference to pre-pandemic levels. In February, 51.6 points were recorded. This also strengthens the picture that Europe is coping with the pandemic better than the US.
Friday - a worse day for zloty
Today, the Polish currency was slightly weaker than yesterday, due to a slight deterioration in sentiment and increased risk aversion. The EUR/PLN exchange rate came close to approx. 4.47 PLN and the USD/PLN to 3.98 PLN.
The worse sentiment was also globally strengthened the Swiss franc, which resulted in an increase in the CHF/PLN pair to around 4.21 PLN, but this also remained within the ranges observed in previous weeks.
Due to the absence of some US investors (the US market is closed before the beginning of Independence Day on July 4th) we do not expect any significant changes until the end of the day.