Polish industry above expectations (Daily analysis 19.12.2019)

Voting on the impeachment without impact on the dollar, the EUR/USD exchange rate in a limited fluctuation range. The growth pace of the Polish industry slows down, but the annual growth by 1.4% is a positive surprise. The zloty stabilises around yesterday's closing levels: the EUR/PLN pair fluctuates around 4.27.

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

• 1:00 p.m.: Statement of the Bank of England.
• 2:30 p.m.: Initial jobless claims (estimates: 225k).

Impeachment is important but not crucial for the market

Thursday's quotes without any significant changes. Yesterday evening, the House of Representatives, which is controlled by Democrats, voted in favour of two impeachment articles charging Donald Trump. One was the abuse of power, the other the obstruction of Congress. President Trump is only the third president in history to be brought before the impeachment process. Although this is probably the most important political event of the day and one that attracts media and public attention, it has practically no impact on the market. In the Republican-controlled Senate, the US President will be cleared of all charges. This is not surprising, as the Republicans were still giving Trump solid support, and according to Bloomberg agency, several Democrats (from states in which Trump enjoys broad support) may also vote against impeachment.

It is unlikely that the market will have anything to look forward to by the end of the year, so the fundamental changes are not expected. All the major events of the back of the year are behind us (the first phase of the US-China agreement, elections in the UK, FOMC and ECB meetings). Moreover, the fact that we are close to the holiday season means that we will probably see a much lower trading volume and limited fluctuations. This is also the trend observed in the quotations of the euro and the dollar. After the EUR/USD exchange rate dropped to around 1.1110 yesterday, the quotations rose to about 1.1140 at midday. Therefore, the volatility range is limited and will probably remain so. In the context of recent weeks, the US currency has remained weakened, mainly due to a mild message from the Federal Reserve after the last meeting.

Will pound react to the BoE decision?

In the morning, data from Polish economy were published. After higher than expected core inflation and current account surplus, the time has come for data from industry and those regarding the producer inflation (PPI). The readings from the industry also surprised positively. According to GUS (the Polish Central Statistical Office) data, industrial production in November increased by 1.4% on a yearly basis, which is a decrease in the pace compared to the October reading of 3.5%, but at the same time clearly above the median of market expectations at 0.3%. However, the data on producer inflation failed to meet market expectations. In November, the PPI index fell by 0.1% year-on-year, while it was expected to grow by 0.2%, and the October inflation rate was revised downward by 0.2 percentage point. Although higher than expected growth in the industry may be a positive sign, even though we are observing a slowdown, data from Poland had a limited impact on the zloty, which depends mainly on external factors. Limited fluctuations among the main currencies contributed to the stabilisation of the Polish currency, which was quoted close to yesterday's closing levels. The EUR/PLN exchange rate was maintained near 4.27 level around midday, while the USD/PLN exchange rate was between 3.83 and 3.84. Later in the day, significant fluctuations can still be expected in the case of the pound due to the Bank of England statement and the dollar after data on initial jobless claims in the USA.