Afternoon analysis 05.05.2015

, author:

Piotr Lonczak

European Commission cuts forecasts for Greece, increasing pressure on the country to wrap up negotiations with creditors. Germany are still sceptic regarding Athens. The zloty strengthened in the second part of the session. The rouble gains, despite weak industrial data.

The German minister of finance, Wolfgang Schaeuble is sceptical about the agreement with Greece before the eurogroup meeting on May 11. Despite the fact that the politician did not rule out such a possibility, according to him the agreement is dependent on the assessment of Troika - the experts from the International Monetary Fund, the European Central Bank and the European Commission.

The European Commission is trying to put some pressure on the authorities in Athens. The forecasts published today showed that the Greek economy is in very bad shape. The EC expects the GDP to increase to the level of 0.5 percent in 2015 - it is a very strong cut when compared to the previous 2.5 percent predicted.

In 2014, the Greek economy recorded an increase of GDP for the first time since 2007. The rebound in one of the most indebted European economies, has been however suppressed to a large degree. It happened due to the uncertainty related with Greece's solvency and remaining as a part of the eurozone.

Greece stands before more and more serious challenges. The country needs to settle its obligations to the International Monetary Fund. The closest payments occur on 6th and 12th of May. Although the Greek government assures their will to respect their obligations, they admit that it will be a difficult task without a fresh dose of money.

Import intensified by the dollar

Today's data about the trade balance in the USA have indicated, that a very strong dollar has a negative impact on export. The trade deficit in March has increased up to 51.4 billion dollars. It is significantly more than the barely 36 billion one month ago. On the other hand, the prognoses expected a result of over 41 billion dollars.

The data have indicated that the strong dollar did not have a negative impact on export. In March, it was 187.8 billion dollars in relation to the 186.2 billion USD one month earlier. The effect of the enforcement of the American currency, was the increase of import, which bounced up to 239.2 billion dollars, from 22.1 billion dollars.

However, this factor will have a negative influence on the results of the American economy, especially the GDP results. Thus, the report moves away from the perspective of raising the interest rates by the Federal Reserve, to the second part of this year.

After publishing the data about the foreign commerce, the EUR/USD pair has gained. In the forthcoming days we will know the data from the labour market. They will allow to evaluate more accurately, whether the American economy is slowing down for good, or if it is just temporary.

A stronger zloty

The Russian industry remains in bad shape. The PMI index for the manufacturing sector, reached a result of 48.9 points in April. It's a better result than the 48.1 points in the previous month. Despite some improvement, the index still remains below the neutral level of 50 points for the fifth month in a row. This situation proves the decreasing activity of the companies from the industrial sector.

Although the headline reading may suggest some improvement, the index's components fade out the optimism. The new orders have mostly burdened the result of the PMI report. This factor has recorded the biggest drop for six years. It means that the perspectives for the manufacturing sector are still negative. Additionally, the sub-index concerning employment has been decreasing for 22 months in a row.

However, the rouble did not mind the weak report. Apparently, the investors have taken the index's increase itself, as a positive solution. Thus, the rate of USD/RUB is falling today down to 51.40.

The European Commission have shown some optimistic prognoses for the Polish economy. The prediction for the increase of GDP in 2015, has been raised to 3.3 percent, from 3.2 percent in the previous estimation. The increase for the next year should amount to 3.4 percent. If the Polish economy will achieve such a result, it will be one of fastest developing economies in the whole of the European Union.

In the second part of the session, the zloty gained on its value. The Polish currency took advantage of some positive factors. They were the American data postponing the increase of interest rates by the Federal Reserve, and the higher prognoses of the European Commission. At the same time, the zloty ignored the unclear information concerning Greece. It only confirms the certainty of big appreciation potential of the Polish currency.

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 Sp. z o.o is prohibited.

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