Zloty ends the week in good shape (Afternoon analysis 21.12.2018)

Good data from the Polish economy supports the zloty - the EUR/PLN pair moves in the lower range of fluctuations over the last two days and falls to around 4.28. Data on GDP in the USA and orders for durable goods failed to meet expectations, but this has a limited impact on the dollar.

EUR/USD just above 1.14

In the afternoon, macroeconomic data from the USA was published, which slightly disappointed expectations. The final GDP growth pace in the Q3 was 3.4 per cent per year, which was 0.1 percentage points less than indicated by the two previous publications of the Bureau of Economic Analysis (BEA). The data on orders for durable goods was not positive either - excluding transport orders they decreased by 0.3% on a monthly basis, although an increase of 0.3% was expected. According to the BEA report, the PCE inflation in Q3 was slightly higher, which was revised upward by 0.1 percentage points, to 1.6%.

The EUR/USD quotations moved within a very limited fluctuation range until the start of the New York session in the afternoon. The EUR/USD exchange rate fell to around 1,147 to 1,141 in the afternoon, after slightly worse than expected data from France (GDP growth in quarterly terms, consumer spending fell). As a result, the balance of positive and negative data from the eurozone and the USA seems relatively even today, which should prevent the main currency pair from experiencing higher volatility.

The positive trend in macro data from the Polish economy has not been interrupted today. Higher than expected retail sales growth in November (6.9% year-on-year vs consensus of 6.5%) supported the Polish currency. The zloty did not record particularly strong price increases on Friday, but it enters the end of the year stronger, gaining in basic currencies for the last two weeks. This should strengthen the resistance of the Polish currency in the case of emerging countries' currency depreciation or the dollar appreciation. However, the likelihood that the zloty will gain significantly in relation to the main currencies is rather limited. The zloty is still held back by the mild stance of the Monetary Policy Council on interest rate increases (which is unlikely to happen in 2019).

The British economy was not able to show off good data today. Although the GDP growth pace was in line with the consensus in Q3 (1.5% year-on-year, 0.6% quarter-on-quarter), the current account deficit was 26.5 billion GBP in Q3, 5 billion more than market estimates and the highest for over 2 years. We have not seen any significant pressure on the pound - Brexit continues to have the greatest impact on quotations, this is information that may weaken the British currency a little, especially if we observe deterioration in the market's sentiment.

Next week's preview

Next week's market trading will be very limited, mainly until Wednesday due to the holiday session. The level of turnover will be much lower; therefore the fluctuation range of the main currency pairs should also be limited. However, this also has its potentially negative sides - in the case of unexpected and highly relevant news, low liquidity may lead to greater price movements than usual.

The calendar of macroeconomic publications for next week is relatively empty. Quite important information will only appear on Friday when another reading of Spain's GDP growth rate in the Q3, as well as preliminary inflation data in December, will be published. Analogous inflation data will also appear for Europe's largest economy, i.e. Germany. In the context of the ECB's monetary policy, the data may be important. Reducing inflationary pressures in Germany could also suggest a worse than expected reading for the eurozone, which could weaken the euro in relation to the dollar. However, if the reading does not deviate significantly from the consensus (currently 1.9%), changes in the euro should be limited.