Positive push from the US (Afternoon analysis 6.07.2020)

After the New York Stock Exchange session began, the positive sentiment continued to dominate. Optimism related to the opening of economies and the combined increase in activity were reinforced by the afternoon's macroeconomic data from the USA.

Services impress, employment increases

According to ISM, the activity of the services sector measured by the PMI index rose to 57.1 points in June. Although the market consensus assumed at least a return from a phase of decline in the sector (50.0 points), the increase immediately to a practically pre-pandemic state (57.3 points in February) further boosted market sentiment.

Practically all the components except employment increased already in June. The sub-index of employment is still in recession, but it also clearly improved as compared to May (43.1 vs 31.8 pts.), which is consistent with a slightly better picture presented by two earlier reports on the US labour market - from May and June.

The further in the year, the greater the risk

However, it should be remembered that the initial months of the economies' exit from closure will be those with the highest growth rates. This supports the currently prevailing positive sentiment, even though at the same time, we are observing suspensions of opening plans or even re-imposition of restrictions in some US states.

In this respect, only the following months can give the market some more clarity about the shape of the recovery path. The rest of the year will be a test of the strength and solidity of positive sentiment mainly due to the upcoming US presidential elections, international trade tensions (US-China, US-EU) and the negotiation of a new trade agreement between the UK and the EU.

The rest of the year will also be a test for a large part of the companies that may face the spectre of bankruptcy at the end of some aid packages. The problems on the labour market in the further part of the year, combined with the aforementioned factors, may increase the risk aversion slightly, strengthening the dollar at the end of the year. Today, however, the US currency is still in decline.

The dollar below in red but the zloty goes up

In the afternoon, the EUR/USD quotations remained just above the 1.13 limit, reaching about 1.1346, which is the highest level in just over two weeks, but it is, in fact, the upper limit of quotations since June 11th.

The globally weaker dollar supports the zloty. The EUR/PLN exchange rate moved in the afternoon in the range of approx. 4.46-4.47 and the USD/PLN exchange rate of approx. 3.94-3.95. The ISM data supported positive sentiment but had a little final impact on the zloty and the current levels are expected to be maintained by the end of the day.