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Daily analysis 25.07.2013

, Autor:

Marcin Lipka

After solid data from the Euro Zone, we received also better-then-estimated reports from the U.S what put some pressure on the EUR/USD. Yellen nomination is not certain? Today the Ifo is in focus and macro data from the US. The zloty has been in correction mood after nine in-the-row sessions of gains.

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.

  • 10.00 CET: German Ifo reading (survey: 106.1)
  • 14.30 CET: Durable goods from the US (survey: 1.4%, excluding transportation is 0.5%)
  • 14.30 CET: weekly jobless claims from the US (survey: 340k)

Slightly lower on the EUR/USD. The data. Discussions on the new Fed's chief

Robust data from the Euro Zone pushed the EUR/USD briefly over 1.3250 level. Later, however, we received better-then-estimated PMIs form the US and reports confirming solid demand for new homes. The purchasing manager index in the States has much less significance then in Europe (in the US all looks at ISM), but almost a half million houses sold in June is the best result in more then 5 years. Real estate analysts still note that the demand is really strong and we sill don't see a negative outcome from higher mortgages rates (for a $200k loan the payment increased from 877 USD in November to 998 USD – Bloomberg data).

The start of European session gave some boost the the EUR/USD and we came back over 1.32. At 10.00 CET we are expecting the Ifo reading. Taking into the account recent elevated ZEW readings and yesterday's PMIs reports the current expectations are probably exceeding the consensus at 106.1. The market needs at least 0.5 point more to continue the upside bias. In the afternoon we have also readings from the US. Traditionally, if the data exceeds the expectations then we should expect the stronger greenback.

The next week will be pretty interesting regarding the US data. Takahiro Izuka from Mizuho Trust in an interview for The Wall Street Journal claims that "The biggest focus is on the U.S. GDP and jobs report data due out next week,". I would also add that the Fed meeting will be also quite important. No change in the QE is expected, but it can be interesting to read the statement and see what is the “mood” in the FOMC. The “WSJ” also sees that the next Fed's chairman/chairwoman can be either Janet Yellen or Lawrence Summers. Izuka claims that “If the next chairman were to be someone other than Ms. Yellen, that would bolster the dollar”. There is also an interesting analysis on the topic prepared by Jon Hilsenrath and Damian Paletta “ Fed Chief Choice Shapes Up as Race Between Summers, Yellen”. More about the issue in tomorrow's analysis.

Summarizing today we have important but not a key data. The market should be traded close to the 1.32 level till the end of the week.

Correction on the zloty.

The Polish currency, after nine in-the-row sessions of gains, weakened slightly and we are currently around 4.23 at the EUR/PLN. A strong support stopped the slide and now we can head above 4.25. Similarly to the global markets the key will be next week.

Moving slightly form the current topics it is worth to mention how politicians/ministers have be engaged in market sentiment. Yesterday as soon as the PMI data hit the wires Polish deputy finance minister Janusz Cichoń commented it saying “Regarding Germany we have a significant gain in the PMI index which gave a kind of optimism and faith that 1.5% GDP (in Poland) is possible in 2013”. Similar statement came from Jan Krzysztof Bielecki, chief economic advisor to the Prime Minister, who told Polish Public Radio 3 (info from PAP) that “PMI reading is above 50 mark so it possible that, for sure, the worse is behind us and we are starting to rebound”. It is worth to note that the data was just 0.1 point above the line which separates expansion form contraction, and the report was not made for Polish but for German economy and the reading was preliminary. The government should have much broader approach and look on the data more closely and broadly, especially that leading indicators have been wrong many times recent

Summarizing there is a small probability that we can retest 4.20 again this week. I would rather see the next Monday opening around 4.25 zloty euro.

Expected levels of PLN according to the EUR/USD rate

Range EUR/USD 1.3050-1.3150 1.3150-1.3250 1.2950-1.3050
Range EUR/PLN 4.2000-4.2400 4.2000-4.2400 4.2300-4.2700
Range USD/PLN 3.1900-3.2300 3.1600-3.2000 3.2400-3.2800
Range CHF/PLN 3.3900-3.4300 3.3900-3.4300 3.4200-3.4600

Expected GBP/PLN levels according to the GBP/PLN rate.

Range GBP/USD 1.5250-1.5350 1.5350-1.5450 1.5150-1.5250
Kurs GBP/PLN 4.8500-4.8900 4.8700-4.9100 4.8300-4.8700

The EUR/USD is still bullish. All Polish pairs are in bearish trends.

Technical analysis EUR/USD: longs are still preferred on the EUR/USD. The first target is 1.32 and another is around 1.33. Alternatively the slide under 1.2950 gives a sell singal.

Wykres

Technical analysis EUR/PLN: we have reached the first target around 4.22. If the strong support around 4.20-4.22 is broken then the EUR/PLN can slump even toward 4.10-4.13. Alternatively the rise over 4.28 is a buy signal.

Wykres

Technical analysis USD/PLN: A fall under 3.28 was a sell signal. The USD/PLN target is 3.18-3.14 now. A comeback above 3.30 again favors bulls.

Wykres

Technical analysis CHF/PLN:the first target was reached at 3.42. The strong support is around 3.40. If it falls under 3.40 the next target is around 3.33. Alternatively a rise over 3.48 is a buy singal .

Wykres

Technical analysis GBP/PLN: the sell signal was generated after sliding under 4.97 with a target around 4.9 and in extension even toward 4.8. Alternatively a rise over 5.04 is an indication of bulls' return.

Wykres

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