The data from the USA as expected, the dollar is weaker (Afternoon analysis 14.08.2020)

Retail sales in the US show a decline, but most of the data published today exceed expectations. Confidence in US consumers is better than expected, but the index is still far from being at the pre-pandemic level.

The data with marginal impact on the dollar

In the afternoon, a set of macroeconomic data from the USA was published. Although the majority of the statistics exceeded market expectations, the publication did not cause significant changes to the market. The euro/dollar quotations are still a little above the 1.18 boundary, only about 0.1% above yesterday's closing.

Sales data were an important element of today's publications. Retail sales increased by 1.2% on a monthly basis in July, which was below expectations at 2.1%. And that was basically the only negative point of information from the US economy revealed today.

If we exclude the impact of vehicle and fuel sales from the data, retail sales increased by 1.5% m/m (1.0% was expected), and the sales control group, i.e. the index that practically enters GDP, showed an increase of 1.4%, also above the expectations of 0.8%. In both cases, the June data were revised upwards by 1 percentage point.

The weakening of sales due to the return of restrictions in some cities and states was expected. And this is shown in the data. After a 6-8% increase in sales in June, July's growth did not even reach 2%.

Today's data were not a big surprise. The preliminary reading for July includes only two weeks of this month. Full statistics and a potential revision will be received in one month, which may also include a greater impact of the restrictions imposed. Therefore, this could be the reason for a subdued market reaction.

In the afternoon as well, the August's US consumer confidence indexes were published by the University of Michigan. The main index rose marginally by 0.3 points to 72.8, although it was expected to fall to 72.0 points, due to the return of restrictions in some parts of the USA. Looking at the components, both the assessment of the current situation and future expectations increased.

There is a positive trend in this, but the index for the current situation is around the lowest levels since 2012. In turn, the index for economic outlook is at its worst since 2013. This shows how far consumers, and therefore the economy, are from reaching the pre-pandemic situation.

The zloty stabilises around current levels; next Friday may be crucial for the Polish currency

For the zloty, the continued weakness of the dollar and the absence of an increase in risk aversion mean stabilisation at relatively strong levels against the main currencies. The EUR/PLN exchange rate continues to oscillate at 4.40. The pair has found balance around this level in recent days. The USD/PLN exchange rate is about 3.72, remaining just below the bottom line since late September/October 2018.

The vast majority of emerging country currencies have not experienced significant changes today. This is a situation that should probably be expected by the end of the day, given the empty calendar of macroeconomic events. If nothing extraordinary happens, the beginning of next week promises to be similar.

The first of the most important events will take place on Wednesday when we will know the minutes of the last Federal Reserve meeting. However, special market attention will be focused on Friday, when the preliminary PMI data from the eurozone for August will be published. They will shed some light on how the path of return to the region is going. Around this publication, an increase in the volatility range is also expected.

The economists' consensus assumes a slowdown in the pace of activity growth in the service sector and its continuation in industry. If the data indicate a stronger than expected slowdown in services, we may observe a weakening of the euro and the accompanying strengthening of the dollar.