Retail sales in US fails (Afternoon analysis 15.10.2018)

The pressure on the dollar may increase. This is caused by weaker than expected data on September retail sales in the USA. As a result, however, it is more likely that the zloty will remain in good condition.

Supported zloty

Apart from the failure of the Brexit talks between the UK and the EU, the beginning of the week on the currency market was relatively calm. The dollar gradually depreciated from the early hours of the morning. The main currency pair, EUR/USD, rose from around 1,155 to 1,160. This is the upper fluctuation range of the last two weeks, and the macroeconomic data from the US published in the afternoon does not indicate that the appreciation of the dollar will be seen this afternoon.

According to data from the Census Bureau, retail sales in September in the USA increased by only 0.1% per month, although the median of market expectations indicated an increase of 0.7%. More significant sales excluding vehicles (the so-called core index) also failed to meet expectations, falling by 0.1% per month (an increase of 0.4% was expected) and recording the first decline in 16 months. The data for the previous month was also revised downward (from a 0.3% increase to 0.2%).

Weaker macroeconomic data from the USA is water to the mill for the Polish currency. The zloty may even strengthen slightly in the following hours, taking into account the improvement in sentiment on markets in Europe. The EUR/PLN quotations were below 4.30 all day long, falling from the morning to around 4.28, while the renewed pressure after the aforementioned data on the dollar resulted in the USD/PLN testing the 3.70 level.

There are practically no macroeconomic publications scheduled for the rest of the day. If we do not observe a deterioration of sentiment on the US market and the continuation of last week's depreciations, the zloty should remain relatively strong.

Tomorrow's preview

At 10:00 a.m. the Polish Central Statistical Office (GUS) will publish September's data on changes in the average wage and employment level in the Polish enterprise sector. The market consensus indicates an annual growth of 7.1% and 3.4%, respectively. At 1:30 p., the National Bank of Poland (NBP) will also present core inflation data in September. Expectations indicate that the level of 0.9% per year will be maintained. Although the potential of these publications to significantly influence the zloty's quotations is limited, the positive impact of the data (in particular on wages and inflation) could be another element supporting the zloty against the main currencies.

At 10:30, the Office of National Statistics (ONS) will publish a report on the British labour market. The most important will be the data on the change in the average wage, given its significant impact on the inflation rate. The median of market expectations indicates an increase in the average wage (including bonuses) by 2.6% year-on-year, i.e. at a similar pace as in August. Around the publication time, an increase in the pound's volatility can be expected, although changes in valuation are likely to be limited in the long run, only a strike from 2.4 - 2.8% could have a stronger impact on the pound. However, the most important factor for the British currency will remain the Brexit issue.