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Afternoon analysis 02.04.2015

, author:

Piotr Lonczak

Mixed data from the US economy pressured the dollar. The euro increased in spite of the Greek uncertainty. The zloty declined against the euro and frank, but the Polish currency managed to increase against the dollar and pound.

The US data concerning the labor market – after a weak result of the ADP numbers on Wednesday – today, managed to surprise positively. The number of unemployment claims dropped to 268k – clearly a lower result than was projected. However, the data from the previous week was revised up to 288k – but it is still quite a good result.

Wednesday's ADP data on employment change in the private sector missed the forecast by showing that companies added only 189k workers – less than expected. Moreover, it has been the first reading below 200k since January 2014.

Mixed figures on the labor market situation are a vague premise before Friday's report concerning the employment situation. An increase of 244k in non­farm employment is projected against a 295k gain in the previous month.

A similar result – given recent weaker data (ISM index, Chicago PMI) – may be difficult to attain. As a result, the dollar has been put in the position to extend its correction as the weakening of the expansion may force the Federal Reserve to postpone interest rate hikes.

Moreover, today's data on industry also provided a rather obscure picture. The final reading on durable goods orders showed that the booking for long­-lasting goods excluding transportation equipment declined 1 percent – more than previously estimated. However, the data on orders in industry surprised positively by increasing 0.2 percent on a monthly basis – a better result than the minus 0.4 percent expected.

Greek uncertainty

The Greek opposition said that it will back the government's efforts to keep the country in the eurozone. The former prime minister Antonis Samaras will support the reform program, if it is needed. Although a consolidation in the Greek political scene in the face of the government insolvency is good information, the impact of the fact is rather symbolic and its practical meaning is marginal.

In the meantime, the reform proposals published by the Financial Times are not very compelling (more about this issue in our morning commentary). The Eurogroup chief Jeroen Dijsselbloem said that the plan outlined by the Greek government is progress, but there is still a long way to go. The eurozone countries will discuss the reform project next week.

Mixed US reports before the key readings on Friday have negatively influenced the dollar. In turn, some progress in the Greek efforts has been positive for the euro.

Mixed zloty

The National Bank of Poland President Marek Belka said in an interview in the “Rzeczpospolita” newspaper that the recent appreciation of the zloty is not posing any threat to the economy. A few weeks earlier, the NBP chief said that a drop in the EUR/PLN to 3.90 zloty is not problematic for the monetary authorities. Since this statement, the zloty has posted significant gains against the common currency.

Given the current market situation – some risk aversion and strong euro – the zloty dropped against the common currency and frank, and posted some gains against the dollar and pound. If the sentiment towards risk assets improves, the Polish currency may return to gains. The EUR/PLN target is still 4.00 zloty.


This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without the written permission from Cinkciarz.pl Sp. z o.o is prohibited.

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