Two days of the pound's increased volatility (Afternoon analysis 10.08.2020)

There are two days of significant publications from the British market ahead of us. On Friday, in turn, important data from China and the USA will be available. They may significantly increase market volatility. Today the zloty remains stable: the EUR/PLN pair is approx. 4.40, and the USD/PLN 3.74.

No major changes on Monday

The week started without much emotion on the broader market. It was supported by a practically empty calendar of macroeconomic events. Today, the EUR/USD exchange rate fluctuated between 1.174 and 1.18, and in an hour and a half after the start of the session on the New York Stock Exchange, the EUR/USD exchange rate was about 1.177, i.e. 0.14% below Friday's closing level.

This is the second trading day in a row when the dollar appreciates, but it still remains weak in the context of the past few weeks. This is beneficial for the zloty, which is in relatively good condition. Today, the zloty's basket recorded only slight fluctuations due to the low volatility in the market.

The USD/PLN exchange rate was close to 3.74 and the EUR/PLN exchange rate was around 4.40, while the GBP/PLN pair fluctuated around 4.90. The exchange rate of the latter pair may experience slightly greater volatility over the next two days when macroeconomic data from the British economy will be published. However, these statistics may be slightly less important than usual, as they relate to a period that is already known to have been disastrous.

Nevertheless, the data will be so important that the pound's volatility is likely to increase significantly at the time of publication. Tomorrow, data from the UK labour market, including average wages and unemployment rate, will be available. On Wednesday we will find out what was the GDP in the Q2, as well as industrial production and international trading balance.

World's eyes are once again focused on China

Key data will also be published at the end of the week. Information from China will also be available on Friday morning. They are significant because they will show how the growth path in the economy that emerged fastest from closure after the first wave of the pandemic is going. For example, data on the parameters of fixed investments, industrial production, unemployment rate and retail sales will be published.

The market's attention may be caught by retail sales. Consumer behaviour and demand largely determine the chances of the economy returning to its pre-pandemic level.

On the same day, but in the afternoon, similar data from the US, i.e., industrial production, retail sales, and University of Michigan consumer confidence indexes, will be available. Here, too, the most important data are those that show US consumer behaviour and sentiment.

The retail sales data cover July and confidence index August. Still, in both cases the growth pace is expected to slow down due to, among other things, restoring restrictions and postponing successive phases of opening in some states. These publications may cause an increase in dollar fluctuations, and a positive surprise may strengthen the US currency somewhat, showing the resilience of the US consumer. However, we should not expect fundamental changes in the valuation of the dollar.