Data on US retail sales in June show a positive trend in consumption but are overshadowed by the re-imposition of restrictions in some states and the still high number of weekly jobless claims. The dollar weakens in the second part of the day, supporting the zloty.
Europe in the limelight
In the afternoon, data on US retail sales in June became available. It should be noted that the data seems to be "historic" given that since the beginning of July, we have been observing the suspension of opening plans and even re-imposition of restrictions in some states. Nevertheless, the data surprised us positively, showing a positive trend as to how the path of increased activity could potentially look if not disturbed by pandemic-related restrictions.
Retail sales rose by 7.5% month-on-month in June, by 2.5 percentage points above the market consensus - the data for May were also revised upwards by 0.5 percentage points. The picture was slightly less positive from the more recent, weekly data on jobless claims. The number of submitted claims amounted to 1.3 million, 50k above expectations, and only marginally below (14k) the previous week's reading. This may, in turn, suggest a stabilisation at relatively high levels.
However, market attention by the end of the week is on events in the Old Continent. Today, we were informed about the European Central Bank (ECB) decision on monetary policy. There was no surprise here. During the press conference, Christine Lagarde, President of the ECB, mentioned that she is looking forward to the entry into force of the aid fund for the EU.
And this is still the most important aspect for market participants. Given the signals coming in, it seems that the probability of a negative surprise is relatively low. Expectations for this aid program for the economies are high, so we can expect an increase in volatility in the broader market tomorrow and on Monday.
Positive reports from the weekend Eurogroup meeting could help the zloty. In the afternoon, with a slight improvement in sentiment in the broader market and a slightly weaker dollar, the zloty pared a slight loss from the first phase of the day against the main currencies. The EUR/PLN quotations fell from approx. 4.4950 to approx. 4.4750 and the USD/PLN returned below 3.92. Significant changes should not be expected before the effects of the Eurogroup meeting, but rather limited fluctuations in the ranges observed over the last days.