Will data be in line? (Daily analysis 11.04.2018)

11.04.2018 12:52|Marcin Lipka

Afternoon and evening trade can be rich in macroeconomic events and signals from the Federal Reserve. After slight increases in the morning, the EUR/PLN rate returned to about 4.19 before the Monetary Policy Council statement.

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.: March CPI inflation from the US (estimates: 2.4% YOY and 0.0% MOM; excluding fuels and food 2.1% YOY and 0.2% MOM),
  • 4:00 p.m.: Statement and press conference after the Monetary Policy Council meeting,
  • 8:00 p.m.: Minutes from recent Federal Reserve meeting.

Day full of data

Positive comments on President Trump's Twitter after his speech by the Chinese counterpart suggest that the temperature connected with foreign trade may fall in the coming days. This, in turn, is a signal that the macroeconomic impulses and the monetary policy reports will be prominent.

The CPI inflation data from the US should attract much attention in the early afternoon. The median of economists' estimates surveyed by Bloomberg shows that in base terms, prices rose to 2.1% year-on-year in March. Simple amounting to the consensus would mean acceleration of inflation to the highest levels in a year. In addition, economists' expectations are spread between 2.0 and 2.1% year-on-year, which means that even a slightly better result than the estimates (by 0.1 percentage point) may support the recently hampered dollar.

Minutes from the last Fed meeting should also have a positive effect on the US currency. The statement and the higher expected interest rates in the FOMC member surveys suggest that the whole discussion might have been hawkish. Some investors may question this event and point out that the recent discussion about tariffs is somewhat reducing the Fed's appetite for higher interest rates. In general, minutes should, like the inflation data, support the dollar, despite its continued negative market sentiment.

Before the MPC statement the zloty remained stable

Alongside the external factors which may have a negative impact on the zloty, it is worth noting the statement and press release after the MPC meeting. The lack of inflationary pressure from the country (the last CPI reading showed 1.3% year-on-year) may signal to some dovish members that in the current economic cycle there will be no need to increase interest rates at all.

If such a view starts to dominate during a press conference, it seems that the zloty should depreciate, and the EUR/PLN may even return above the 4.20 boundary. A negative scenario for the Polish currency is likely to be fulfilled if it turns out that inflation in the USA accelerated above the consensus and the FOMC was much more hawkish than it appeared during Jerome Powell's press conference (details in the previous paragraphs).

In the afternoon and in the evening, the risks for the zloty to depreciate may be increased. However, the drop in the zloty's value should not be dramatic even in the case of a negative scenario. The EUR/PLN is unlikely to breach the 4.21 level, and the dollar will have limited chances to exceed the 3.42 PLN.

 


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