Weak data from France (Daily analysis 21.12.2018)

The dollar depreciates after the Fed's decision to increase interest rates. The Bank of England notices an increase in uncertainty about Brexit and lowers the economic prospects. The market situation is favourable to the zloty.

The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.

• 2:30 p.m.: Orders for durable goods in the USA in November (estimates for core index 0.3% month-on-month).
• 2:30 p.m.: GDP growth pace in the USA in Q3 (estimates: 3.5% on yearly basis).

Possible government shutdown

The dollar continued to weaken after the Federal Reserve's decision to raise interest rates. The euro to the dollar quotations moved in a very limited range around about 1,1450 USD. The US reports, do not support the dollar either - President Donald Trump said he would veto every budget, which will not include at least 5 billion USD of additional financing for the construction of the wall at the border with Mexico. This could lead to the partial shutdown of state institutions in the USA, which would have a negative impact on the economy and GDP growth.

On Friday morning, also mixed data from eurozone economies appeared. After a significant decline in the Ifo climate index, it was also expected that the consumer climate would fall. However, the index compiled by GfK surprised positively and remained at the previous month's level (10.4 points). The data from France, Europe's second economy, turned out to be worse. The GDP growth in the Q3 in annual terms remained at the 1.4% level, and on a quarterly basis, it amounted to 0.3%, 0.1 percentage points less than previously indicated by the French statistics institute. The data on French consumers' spending was also weaker - it fell by 2 per cent per year (consensus indicated a decrease by 1.6%), while the month-on-month decline was 0.3%, although economists' expectations did not change.

As a result of slightly worse than expected data, there was a slight sales pressure on the euro before midday - the EUR/USD quotations fell from about 1.1470 to 1.1410. In part, this may also be due to the rebound in the dollar's value decline. In the case of the US currency, the afternoon publication of macroeconomic data, particularly GDP-related data, which has been a rather hot topic recently, may be very important. This will be the third reading of the data (final) and the chances of significant deviations from the previous ones are limited. However, if there is a significant difference compared to the previous result, which was 3.5% y/y, then it could trigger a clear dollar reaction.

Data from Poland better than expected

Another set of positive information came from the Polish economy today. After better than expected readings on industrial production and wages, retail sales also exceeded economists' estimates, increasing by 6.9% year-on-year in November, in real terms. Poland's economic situation seems to support the zloty even more. The reaction to the published sales data was very limited today - the EUR/PLN pair is still moving in the range of 4.28-4.29, just like yesterday. The zloty's quotations movements were not large this morning and to a large extent reflected the behaviour of the main currency pair (a drop in its exchange rates weakens the zloty basket somewhat). The zloty's quotations are likely to remain within the observed relatively small fluctuation range, oscillating around current levels.