__cfduid
Valid: 29 days
It helps us protect the website from threats such as hacker attacks. Used by Cloudflare to recognise trusted network traffic.
__lc_cid
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
__lc_cst
Valid: 3 years
Necessary for proper functioning of the chat available on the website.
rc::a
Valid: It does not expire
Cookies to correctly distinguish between human and bot-generated traffic.
rc::b
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
rc::c
Valid: 1 session
Cookies to correctly distinguish between human and bot-generated traffic.
NID
Valid: 6 months
Records a unique number to recognise the device you are using. It is used for advertising.
_ga
Valid: 2 years
Registers a unique user number to collect statistical data about how you use our website.
_gat
Valid: 1 day
Used by Google Analytics to reduce queries. Reduces the amount of statistical data collected.
_gid
Valid: 1 day
Registers a unique user number to collect statistical data about how you use our website.
yt-player-bandwidth
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
yt-player-headers-readable
Valid: It does not expire
Determines the best video quality based on your device and the Internet connection used.
PMI reading from the eurozone in line with expectations. Significant increases in the yields of US Treasury bonds - 10-year instruments close to 3% boundary. The zloty depreciated which was caused by a stronger dollar. The EUR/PLN pair close to the 4.20 boundary.
The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.
PMI with negative surprise
Published in the morning April's PMI index in the eurozone did not surprise positively. Although the readings from Germany and France were slightly above economists' expectations, the overall publication from the single currency area was close to market consensus and the same as in March.
It is worth noting that the industrial production index dropped to 17-month lows. In turn, new orders were the lowest in the 15-month period for the eurozone. However, the employment component has increased, but it seems that the overall condition of both services and industry is unlikely to return to long-term highs observed at the beginning of the year.
The current readings should not be perceived as strongly pessimistic. Values around 55 points level are still relatively high. In addition, according to estimates, the Markit indicates approx. 0.6% GDP growth QOQ. The economic situation is therefore still positive, but the but the optimism seen at the beginning of the year is far from being present.
Dollar's going up
Last week, we stressed that the dollar may remain weak as long as yields of 10-year US bonds remain below 3.0%. Since then, however, there have been increases on these instruments in the range of 20 basis points and today the level of 3.0% was practically reached (2.9950). This is the main argument that led to the strong dollar appreciation in the last two days.
In addition, the difference between the yields of 10-year US and German Treasury bonds is the highest in almost 30 years. The market also estimates that the rates will increase by 56 basis points from their current level by the end of the year. This means two full increases of 25 basis points and a chance of a third increase in December.
Therefore, the market's key information will be the behaviour of US Treasury bonds in the coming days. The fact that many investors exceeded the level of 3.0% on the yields of 10-year instruments is perceived by many as the bond bear market (price decrease; yield increase). The panic in this market may signal a steeper path of interest rates in the coming quarters. This should be a positive signal for the dollar if the increase in profitability continues to be caused by higher inflation expectations and growing divergences between the future interest rates of the US and other developed countries.
Zloty under pressure
The last hours were characterised by a clear weakening of the zloty. Traditionally, the Polish currency is slightly more sensitive to external factors than e.g. forint, which means that the zloty lost not only to the euro, the dollar or the franc, but also to HUF. However, this movement does not differ from the standard behaviour of the Polish currency in the case of rising future interest rates in the USA and the strengthening of the dollar.
Competition caused by higher interest rates in the US may be an attractive bait for some of the portfolio capital involved in some emerging markets. In addition, in Poland or the eurozone, a monetary tightening is not expected. The extension of the current trend on the U.S. bond market and the yield of 10-year treasury bonds exceeding 3.0% (details in the previous paragraphs) may further increase the pressure on the emerging countries' currencies, including the zloty. In such a scenario, the EUR/PLN pair would quickly exceed 4.20 and USD would be higher than at present.
Subscribe to our currency newsletter
See also:
Swiss currency under pressure (Daily analysis 20.04.2018)
Franc is getting stronger (Daily analysis 17.04.2018)
Zloty remains stable (Daily analysis 16.04.2018)
Stabilisation (Daily analysis 13.04.2018)
Attractive exchange rates of 28 currencies
Live rates.
Update: 30s
Open your free account today
Save your time and money. Create an account for free and discover how much you can gain. Join us today, and start using attractive currency services.
Create free account