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Afternoon analysis 17.04.2015

, author:

Piotr Lonczak

The zloty dropped against all its major pairs. The Polish currency was hit by the risk aversion due to the Greek turmoil. Surprising inflation numbers pressured the EUR/USD.

After three days of gains, today the major currency pair dropped from the highest level since April 8. The rebound in the EUR/USD was stopped by the US inflation data, this suggests a rising pace of the price growth.

In March, the consumer inflation growth stood at 0.2 percent on a monthly basis, and minus 0.1 percent on a yearly basis. However, more important numbers concerning core inflation growth, exceeded the forecast. The price measure that excludes volatile prices of the food and energy increased by 0.2 percent from the previous month and by 1.7 percent against March 2014 – a result above the forecast.

Recently, the data from the US economy consistently missed expectations. The readings on the industrial production and the retail sale figures disappointed. However, the retail sale report was somewhat different – although it also failed to meet the projection, it showed the first increase in sales in the last months – a sign that consumption has started to improve.

In the meantime, the labor market performance is the best in years, in spite of some recent reports that failed below the forecasts. This is a very good basis for the consumption rebound, when the household sentiment improves. Today's data from the University of Michigan showed that the sentiment index increased more than was expected.

Greek anxiety

Greece is affecting sentiment in a negative way. Recently, there were information that the country prepared a default plan, and probed the International Monetary Fund if it is possible to postpone May’s debt payment (1 billion euro). The Greek government is simultaneously saying that the agreement will be reached.

The anxiety is reflected in the bond market. On one hand, we see a spike in the Greek bond yields, and similar moves in the bond from other countries with fiscal problems. On the other hand, the German bond yields are getting more negative – today the yield on the country's 10 year security dropped as low as 0.05 percent. Every bond with a shorter maturity has a negative yield.

The data in favor for the dollar and mounting anxiety in the eurozone resulted in a drop in the EUR/USD. The stock markets were also affected by the negative sentiment, as the US and European indexes posted significant losses.

Weaker zloty

The negative sentiment in the broad market affected risk assets. As a result, the zloty dropped against all its major pairs. The Swiss franc hovered above 3.90 zloty.

Today's data from the Polish labor market were very good. The pace of wage growth stood at 4.9 percent on a yearly basis – more than the 3.4 percent that was expected. Employment increased 1.1 percent – in line with the forecast.

The base scenario for Greece is eventually achieving an agreement with its international creditors. There is still enough time – the Eurogroup meets on April 24. If the Greek risk factor is removed, the zloty will return to the appreciation.


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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