Jobless claims once again exceed 1 million (Afternoon analysis 20.08.2020)

Data from the USA are slightly less optimistic - the dollar appreciation fades in the afternoon. The zloty's value increases, taking advantage of the reduced demand for the US currency. The USD/PLN exchange rate falls again below 3.70.

US labour market still in the limelight

The afternoon brought slightly weaker macroeconomic data from the US, which also fit well yesterday's news from the Federal Reserve Monetary Committee (FOMC), indicating that the coronavirus continues to pose a serious threat to the economy's prospects in the medium term.

According to the weekly report of the US Department of Labor, the number of submitted initial jobless claims rose again above 1 million: from 971,000 to 1.1 million, although it was expected to be 920,000. The Federal Reserve Bank of Philadelphia's manufacturing business outlook survey also showed a decline from 24.1 to 17.2 points, below the expected 20.8 points.

This stopped the rather slow dollar's appreciation observed since yesterday evening. The euro/dollar quotations, after testing the 1.18 boundary, increased in the afternoon to about 1.1860, i.e. 0.15% above yesterday's closing.

Yesterday and the day before yesterday we had slightly more optimistic macro data from the US (excluding "minutes" from the FOMC meeting), however, after today's data, the market may have a slightly more cautious picture of the economic situation in the US.

For investors, this means, among other things, waiting for further readings to assess how the economic recovery is proceeding, and for the dollar, most likely, no fundamental changes in the coming days.

What harms the dollar, supports the zloty

The weakening of the dollar in the afternoon helps the zloty. The Polish currency remains one of the strongest in the group of emerging countries. The USD/PLN exchange rate fell again below 3.70, while the EUR/PLN exchange rate dropped to about 4.38.

By the end of the day, there will probably be no significant fluctuations. This may change as early as tomorrow morning when we will see the preliminary August activity indexes in the industrial and services sectors for the eurozone.