Positive data from Europe (Daily analysis 6.08.2020)

The weakening of the dollar in the morning was stopped by the expectation of tomorrow's US labour market report. Positive macro data from Europe for the previous months confirm trends in the market. The zloty is slightly weaker but in the fluctuation range of recent days.

Europe surprises positively

To the midday, there was a slight rebound and a somewhat higher level of risk aversion. The dollar was appreciating, but only marginally: the EUR/USD quotations were around 1.1850 around midday, although still 0.1% below yesterday's closing, but still just above the upper limit since May 2018.

Today, there are no major changes as participants await Friday's report on the US labour market. Although the data did not have a major impact on quotations today, macroeconomic data from several European economies have been published, which confirm recent trends in the region.

Orders in the German industry increased in June by 27.9% compared to May, well above the expected 10.1%. This is still 11.3% below the previous year's level, but it was also a positive surprise, as a drop of 18.5% was expected, and in May it was as much as 29.3%.

The construction sector in Germany also showed a positive trend in July: the construction activity index rose from 41.3 to 49.7 points, just below the line separating recession from growth (50 points). In the report by IHS Markit, it was also noted that the expectations of entrepreneurs in the sector for the next 12 months were the least pessimistic since the pandemic began.

One of the more affected economies also showed similarly positive data. Industrial production in Italy increased by 8.2% on a monthly basis in June, 3 percentage points above expectations. As in the case of Germany, this was still a 13.7% decline compared to last year, but also here it was not as deep as the economic consensus (-16%).

The data from the CEE economies were similarly positive. The industry in Hungary grew by 17.1% on a monthly basis in June and in the Czech Republic by 13.4%. The Hungarian forint and the Czech koruna are the strongest currencies of emerging countries in the last four weeks, and current macro data also confirm why.

Right behind them is the zloty, even though today the basket of the Polish currency is in a slightly weaker condition. The USD/PLN quotations increased to nearly 3.73, the EUR/PLN pair fluctuates in the range of approx. 4.40-4.41, but these ranges are consistent with those observed in previous days. These fluctuations may increase slightly tomorrow when the US labour market report for July is published.