Erste Bank Research Team
Erste Bank
Quite heavy macro calendar this week. Employment and nominal wage growth to be released on Tuesday. Industrial output and retail sales data (due Wednesday) should confirm solid 2Q17 GDP growth, although slightly below 4% seen in 1Q. ECB meeting to be key event for FX and bond market, as investors seeking confirmation of more hawkish Draghi.
July 18: Market expects employment to grow 4.3% y/y in June and nominal wage growth to go up by 5.0% y/y, marginally lower than our estimate of 5.1% y/y growth.
July 19: Industrial output to grow 3.2% y/y in June (vs. market expectations of 3.9% y/y). We see retail sales growth of 5.8% y/y (vs. consensus of 6.8% y/y).
Spread vs. Bunds narrows further Over the last week, the long end of the curve has been relatively stable. Although German yields went up, the spread vs. Bunds has been narrowing, keeping 10Y Polish yields close to 3.32% throughout the week. On Monday, however, long-term yields dropped marginally. There are many domestic releases this week, but they should have limited impact on the bond market. Thursday’s ECB meeting should be the key event. Draghi’s recent comments have been read by the market as hawkish and have visibly pushed up the long end of the German curve. Investors will thus be looking for confirmation as to whether Draghi has indeed turned hawkish. A dovish tone, on the other hand, would be positive for the bond market and we expect the Polish yield curve to follow developments on core markets.
Zloty supported by global sentiment The zloty strengthened more visibly towards the end of the week because of the CPI data in the US. The disappointing release was a trigger for the zloty to move toward 4.20 vs. the EUR at the end of the week. On Monday, the zloty lost some of this strength. If there are no major surprises in monthly data releases, the zloty should remain relatively strong. At the end of the week, however, global sentiment will set the tone for the EURPLN, as the ECB meeting will be closely watched by investors.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.