No further clues (Daily analysis 09.04.2018

The broad market remains volatile due to reports of customs duties. Powell's speech neutral for currencies. The zloty in a narrow fluctuation range. EUR/PLN quotations close to the 4.20.boundary.

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.

Continuation of the customs conflict

During the last few days on the share market, investors have clearly been unable to decide whether the customs dispute between the United States and China will end in a trade war or whether the whole current discussion is just a political issue.

On Friday, the basic US indexes dropped by more than 2% after the White House presented the concept of imposing new import duties on Chinese goods amounting to an additional 100 billion USD and the fact that the US officers did not negate this information.

However, a softer tone appeared during the weekend. In CBS' Face the Nation programme, Treasury Secretary Steven Mnuchin spoke, saying (quoting from The Wall Street Journal) that he 'does not expect a trade war'. In A similar way, the comments of Larry Kudlow, the new head of economic advisors in the White House, can be noted. In his speech for 'Fox News Sunday', he stated that 'there is no trade war on the horizon'.

To some extent, President Trump's comment on Twitter could also help to calm the nervous atmosphere. On Sunday, Donald Trump wrote that "President Xi and I will always be friends, no matter what happens in connection with our trade dispute.

It is difficult to predict when the market's sentiment volatility will decrease due to the conflicts between Washington and Beijing. It appears that the first real sign of improvement could be the opening of formal negotiations (the Chinese side maintains that negotiations are not in progress). On the other hand, a clear sentiment deterioration may occur if Chinese officials start to suggest the possibility of restricting trade in services (here the US has a surplus with the Middle Kingdom State). The desire to devalue the yuan or the signals of getting rid of US bonds would also be a negative element.

Currently, it is difficult to assess if the real trade war is negative in the short term or whether it is positive for the dollar's value. A sudden break in sentiment may result in an escape from emerging markets to the Japanese, Swiss and also the US currency. In turn, moderately negative signals (the threat of introducing restrictions, rather than their physical implementation) cause a sale of USD due to the decreasing chances of interest rate increases by the Fed. However, the milder option does not result in capital outflows from emerging countries.

Powell's speech without impulses. Stable zloty

Apart from issues related to foreign trade or readings from the US labour market (negative rather than positive for the dollar), it is also worth noting Friday's speech by Jerome Powell, Head of the US Federal Reserve.

In general, Powell's speech was optimistic (strong labour market, good consumer climate, clear acceleration of investments, rapid economic growth). In the context of inflation, Powell expects the elimination factors that slowed down price growth last spring. However, apart from this information, the market has not received any suggestion that would position Powell above or below the FOMC consensus on the monetary tightening pace. As a result, it should be perceived as neutral.

In the case of the zloty, the Polish currency remains stable. The EUR/PLN exchange rate is close to the 4.20. Little happens also in the case of the forint (the result of the elections was not a surprise for investors) and on the Czech koruna. Currently, our region, from a trade point of view, can be relatively resistant to hypothetical tariff fluctuations between the two superpowers. This also (apart from a stable economic situation) may keep the zloty's quotation in a relatively narrow fluctuation range.