Surplus in Polish trade above expectations (Afternoon analysis 13.01.2020)

The yen the weakest since May - the USD/JPY exchange rate is just below the 110 boundary. The pound depreciates after publishing worse-than-expected data from the British economy. The zloty is stable, and today it has been supported by better-than-expected trade data for Poland.

Still limited changes in the EUR/USD

The new week began with a calm quotation of the main currency pair - the EUR/USD. Half an hour after the session on the New York Stock Exchange began, the EUR/USD exchange rate was at around 1.1120, the same level as on Friday. Slightly greater fluctuations were observed in the case of the yen. Exceeding the 109.73 level by the USD/JPY pair led to new highs since the end of May last year, just below the 110 level. The globally weaker yen also reflects the still very good sentiment in the broader market.

After a slight disappointment in the case of the fall in GDP of the British economy in November (by 0.3% month-on-month), the pound remained under clear supply pressure today. In the afternoon, with a drop by about 0.6% to the dollar, it was just below 1.30, the lowest level since the end of December. This slightly increases the probability of a milder monetary policy in the Islands later in the year. This is already being discussed more and more widely, due to statements of the Bank of England members suggesting interest rate cuts, and the likelihood of such a scenario being realised may be increased by further weaker macroeconomic data from the British economy.

Unlike the pound, the zloty's basket remains stable. The Polish currency's quotations in relation to the main currencies move in limited ranges, except for the GBP/PLN pair, which fell to the lowest level since November, around 4.94. The EUR/PLN exchange rate is currently closed between around 4.23-4.24, and the USD/PLN rate is just above 3.80. Significant changes in the further part of the day should not be expected due to an empty calendar of macroeconomic events. The zloty may also be supported by international trade data, which have far exceeded market expectations.

According to the National Bank of Poland (NBP), in November, Poland recorded a trade surplus of 829 million EUR, vs expected 356 million (and 427 million a month earlier). As a result, Poland's current account balance also improved, recording a surplus of 1.457 billion EUR, i.e. by 1 billion above expectations, and the highest since January last year.

Tomorrow's preview

At 2:30 p.m., the Bureau of Economic Analysis (BEA) will publish US Consumer Inflation (CPI) data in December. The median of market expectations indicates its increase from 2.1 to 2.4% year-on-year. The much more significant core index (excluding energy and food prices) is to remain unchanged at 2.3% year-on-year. This is not the Federal Reserve's preferred inflation rate (PCE). However, the readings may indicate what price processes are taking place in the economy.

Currently, we do not observe any increasing pressure on inflation. The recent labour market report and lower-than-expected wage growth suggest even the opposite, although this is a one-off weaker reading for the time being. In this context, we are unlikely to expect any significant upward revision. Although deviations of the core index from the consensus may increase the range of the dollar's fluctuation, fundamental changes after this single reading of inflation should not be expected.