Surprises in important data regarding USA economy (Afternoon analysis 14.02.2020)

Mixed data from the US economy did not affect the EUR/USD quotations. The zloty is stable. Next week, a preliminary overview of the extent to which the coronavirus is influencing the sentiment in the European market will be available.

Positive consumer sentiment in the USA and a tiny scratch on the industry

In the afternoon, significant data from the US economy were published. Retail sales in January turned out to be in line with expectations, increasing by 0.3% month-on-month, as well as its core index (excluding vehicle sales). In turn, the control reading, which implements the GDP directly, was slightly disappointing, recording no changes compared to December, and the December data were revised downward by 0.3 percentage points. Industrial production, which fell by 0.3% in January, turned out to be slightly lower than the consensus (by 0.1 percentage points). This is practically the first of the more important data from the US economy, which do not lead to excessive optimism.

The consumer confidence index did not represent such a tone. According to preliminary data from the University of Michigan, US consumers are currently in the best sentiment since March 2018. Their sentiment index readings of 100.9 points exceeded market expectations by 1.4 points. The improvement of the financial situation was felt by 58% of consumers, which was a record level. Americans' willingness to buy houses was also at the highest level since October 2017, while the positive attitude towards mortgage interest rates reached it's highest level since September 2016.

As a result, the data turned out to be relatively neutral for the dollar. In the afternoon, the EUR/USD quotations are moving around 0.1% (approx. 1.0850) from yesterday's close. Attention should shift to the impact of coronavirus on the global economy. The following days may provide some indication of the change in the pace of the morbidity after the Chinese authorities modified their methodology two days ago. Next week, the first data from February from the eurozone will also be available, which may give an initial indication of the scale of market concerns about the impact of the virus on the economy.

The zloty's quotations remained within a limited fluctuation range. The EUR/PLN exchange rate was still within a narrow range of 4.24-4.25, the USD/PLN exchange rate fell slightly below 3.92, the GBP/PLN exchange rate fell below 5.10, and the CHF/PLN exchange rate fell below 4.00, about an hour after the opening of a session on the New York Stock Exchange. Next week will also be important for the Polish currency. If the data show a greater impact on the eurozone economy than expected, we may observe a weakening of the zloty's basket as well as other emerging currencies.

Next week's preview

The next week may be important for the market. This is because, among other things, there will be first data from the eurozone, which already take into account to some extent the impact of coronavirus-related uncertainty on economic sentiment. On Tuesday, the ZEW institute will publish an index of economists' sentiment in February, and on Friday the IHS Markit will present preliminary data of the February PMI indexes in the eurozone. In both cases the median of market expectations assumes declines, but relatively small ones. The impact of the coronavirus is currently difficult to estimate and if the data turned out to be much weaker than the consensus, market sentiment could clearly deteriorate. This, in turn, could increase supply pressure on emerging countries' currencies, including the zloty.