The situation on the currency markets is relatively calm. Generally, there are good moods, but the dollar can not find constant support in the great data, hawkish words from Fed, or even supporting statements from Donald Trump. On the other hand, in case of Polish we have another packet of data, which according to market expectations are to show from good side.
The US dollar gets another series of good macroeconomic data. This week we’ve seen brilliant inflation, which, contrary to mixed expectations grew in every dimension, which may also show the upward pressure on inflation from the PCE, which is the goal of the Federal Reserve. On the other hand, we had great data on retail sales, and yesterday good data on the real estate market. Housing starts came out weaker than the previous month, but better than market expectations. In addition, permits to build homes rose to the highest levels of the year, which indicates a continued high share of investment in the construction of economic growth.
Janet Yellen showed the strong hawkish side this week, indicating that you can not wait too long and allow the overheating of the economy. Inflation reflects quite strongly, although the Fed would like to see a real reflection of wages, which at this point looks rather miserable. On the other hand, from the political side Donald Trump talked about support for the economy and, above all pointed to the rapid introduction of tax reform. This time, however, the market did not react with euphoria and the dollar was rather weaker during yesterday’s session.
Euro continues to be risky in terms of the upcoming elections in Europe, particularly in France. Marine Le Pen is still leading in the polls on the first round, although in case of the second round, each survey indicates loss with any of the other candidates: Macron or Fillon.
PLN remains relatively weaker compared to the previous week, while against the euro remains in a downward trend, and just above the 4.3120 we see a strong supply zone. Today we will know the data on industrial production and retail sales. The industrial production big problem was the decline in construction output, although the rate of decline began to slow down recently. Sales last month turned out to be very strong, which in part can be explained by the effect of 500+, which is obviously a positive effect in terms of growth. The market expects a significant rebound in industrial production at 7.8% y / y for January and retail sales growth of 7.6% y / y. Oprócz this poznamy PPI inflation, which should amount to 3.7% y / y.
Michael Stajniak Analyst Financial Markets XTB