Afternoon analysis 14.05.2015:
The US data concerning the labor market did not support the dollar. The zloty increased as the inflation data showed some improvement.
Thursday's data on the unemployment claims surprised positively. The number of unemployment claims dropped one thousand to 264k – clearly a lower result than 275k that was projected.
Given the report, the expansion in the labor market looks very strong in spite of mixed numbers that were released in the previous week. The four week mean - a less volatile measure of the situation - dropped to the lowest level since April 2000.
Earlier, the numbers concerning the labor market were quite vague. The report on employment change in the non-farm sector was in line with the forecast. However, the ADP report on employment change in the private sector and the Challenger numbers on expected firings showed some deterioration in the labor market.
Nevertheless, a broader look at the US economy reveals, that the major world economy is slowing. Even quite good condition of the labor market is not enough to improve this appraisal. Yesterday's data on the retail sale growth missed the forecast. Earlier, the data on orders in the industry also were not too optimistic.
Thus, the market reaction after the labor market data is rather balanced. Although the EUR/USD dropped in the second part of the day, it is still near its highest level in three months around 1.14 dollar. Shift in the expectations for the first interest rates hike in the US paved the way for a larger increase of the major currency pair.
The Greek finance minister Yanis Varoufakis said the debt repayment to the European Central Bank should be pushed back. However, a similar solution would not be accepted by the ECB president Mario Draghi, who has to consider the German Bundesbank opinion.
Today the Greek politicians will talk with the eurozone and the International Monetary Fund officials. Intensification of talks was caused by the mounting pressure on Athens as the European politicians are willing to cut speculations on a possible default of the country. Moreover, today the ECB president will meet the IMF chair Christine Lagarde.
In the meantime, the information agencies said that the German government will agree to allow the Greek government to conduct a referendum on the reforms program. This move increased the probability that the final agreement will be reached sooner than later.
Zloty increased after inflation numbers
The inflation data in Poland was a little better that the forecast. The Central Statistical Office said that the price index in April was lower 1.1 percent against the previous year. The forecast was minus 1.2 percent. In March, the consumer price growth stood at minus 1.5 percent.
The inflation increased 0.4 percent on a monthly basis. A result above 0.2 percent that was expected. In the previous month it increased 0.2 percent.
The release is helpful for the zloty. The Polish currency rose for a second day and posted gains against all its major pairs.
On Friday, the report concerning the GDP growth in Poland will be released. The economy is expected to growth 3.3 percent on a yearly basis in the first quarter of 2015 after 3.1 percent growth in the previous three month period. If tomorrow's release meets the projection and the broad market sentiment is favorable for risk assets, the zloty may extend its recent gains.
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