Sentiment on the market improved, but it is most likely only a response to yesterday's falls. Neither the minutes from the last ECB meeting nor the US inflation data surprise the market. The main currencies may continue to be traded relatively calmly during the rest of the day.
Today, a slight reaction to yesterday's falls was observed on the market. The main market indexes in Europe (as well as futures contracts for the US indexes), most of the raw materials or the Polish zloty appreciated. The minutes published at 1:30 p.m. from the last meeting of the European Central Bank (ECB) did not surprise the market. The euro/dollar quotations were not affected by this publication.
Today, market attention could have been focused on data from the Bureau of Labor Statistics (BLS) in the USA, which published June's consumer inflation (CPI). The headline inflation index increased to 2.9% per year, in line with market expectations. The consensus was also supported by a more significant core inflation, which amounted to 2.3% as compared to June last year. The EUR/USD exchange rate reacted to this publication and an increase from around 1,166 to 1,169 was observed, but this was within the fluctuation range of today. After today's data (CPI in the USA, ECB), the currency response should be rather limited.
Slightly better sentiment on the market supported the Polish currency. The euro dropped to around 4.32 PLN at 3:00 p.m. (yesterday it approached 4.35 PLN). In relation to other major currencies, the zloty strengthened slightly, although the changes were small and were within the fluctuation range of the last days.
Although the negative scenario for the zloty has not come true today (CPI in the USA have not exceeded estimates), in the long term the zloty is likely to weaken. The opposite is true for the US currency, which, despite the lack of positive surprise today, should be gradually appreciated due to the monetary tightening in the US (and, accordingly, its lack in Europe).
At 10:00 a.m., the Polish Central Statistical Office (GUS) will present data on consumer inflation (CPI) in June. This will be the final reading, so no significant changes are expected. This publication will be complemented by a categorisation which may help to better estimate the impact of the most volatile factors on inflation. Taking into account that this is the second reading, the dovish attitude and lower inflation projections in Poland, it is hard to expect that the publication of GUS will have a positive impact on the zloty.
Six hours later, the University of Michigan will present the preliminary consumer sentiment index in July. In June, it decreased slightly by 1.1 percentage points to 98.2 percentage points. The same is true for the median of the market expectations for July. However, this reading may have a limited impact on the dollar, taking into account the volatility of market sentiment in recent days due to potential restrictions on international trade. Eventually, Friday in the case of the foreign exchange market will probably be dictated by changes in market sentiment and potential new customs information.