Retail data from Spain emphasise the bittersweet picture of the recovery of the economies from the pandemic: retail sales in May recorded strong growth of 19% compared to the previous month, but still 19% lower than last year. A weaker zloty was recorded on the last trading day.
The dollar maintains the increases
Today important macroeconomic data from one of the European economies most affected by the pandemic, i.e. Spain, were presented. The INE, the statistical office of Spain, reported that retail sales in May dropped by 19.0% annually, slightly less than expected -19.8%. Although not as deep as April's -31.6%, but still it is some of the weakest readings in history.
Data on retail sales on a monthly basis show how deep the crisis is. Retail sales increased in May by 19.3% compared to April (in April, drops of 20.3% m/m were still observed). Apart from food, which remained practically unchanged, sales of household products increased by 89.5%, and of personal products by 125.3%.
Such strong increases will be flattened out (with the growth of the base), but they remind us of the low level of activity that the growth path will go on. This, in turn, may somewhat suppress sentiment in the coming months, mainly due to risks later in the year (e.g. the November US elections, which also had a major impact on the customs fights with China and the EU, UK trade negotiations with the EU).
Currently, the sentiment is fundamentally unchanging; the market is moving in a limited fluctuation range. Today, the dollar maintains the profits generated in recent days: the main currency pair's quotations are moving just above 1.12, although the day before yesterday they were even close to 1.1350.
Consequently, increased supply pressure on emerging countries' currencies, including the zloty, is also maintained. The zloty was losing in relation to most of the main currencies and although we did not observe any fundamental changes, the EUR/PLN quotations of approx. 4.47, the USD/PLN of approx. 3.99 and the CHF/PLN of approx. 4.20 represented the upper range from the last 3-4 weeks.
Despite the slightly better condition of the US currency in the last two days, its levels are still far from those of the turn of May/June, when the EUR/USD was trading at around 1.09. And although the weaker USD's condition in the context of the month is an effect of optimism related to the opening of economies and the stimulation of central banks, the growing number of cases in some US states (yesterday's record number of cases in the whole country) may gradually weaken this positive market sentiment. As a result, this may lead to the dollar paring losses and increasing supply pressure on the zloty.