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Afternoon analysis 20.02.2015

, author:

Marcin Lipka

The last week's main event were the negotiations about extending financial help for Greece. In the meantime we had an episode of the franc's weakening. During recent days the zloty behaved relatively calmly, but today we can observe a bigger nervousness on the market.

All eyes on Greece

It seemed that it was impossible to write anything more about Greece. For weeks we know, that Athens want to resign from the savings policy, and apply for reduction of debts. On the other hand, Greece's creditors do not want to agree for these compromises, and claim that the new government should respect the decisions of their predecessors.

However, the situation has clearly accelerated yesterday. First, Greek minister of finance published a letter, in which at first sight, Greece agrees to continue the current help program. Athens' assumptions “tricked”, amongst others, the chief of European Commission Jean-Claude Juncker, who by his spokesperson claimed, that Warufakis' offer “can be a road to a reasonable compromise”. French president reacted in a similar way. According to the British journal, “The Telegraph”, he even congratulated the Greek president on his “crucial decision”.

This optimism, however, has quickly vanished, when the Tsipras' offer has been analysed by the German ministry of finances. Its representatives claimed, that it does not respond with previous offers of the euro group, and “it goes in the direction of bridge financing, without fulfilling the assumptions of current help program”.

One of the last chances for standpoints rapprochement, is today' meeting of the euro zone's ministers of finance. Expectations before the meeting are not very high. Especially that Malta's chief of financial department Edward Scicluna said, that the countries who support Germany's standpoint, are prepared for the scenario of Greece's departure from the euro zone. On the other hand, “Der Spiegel” wrote today, that the economists from EBC, are conducting a simulation, how would Greek departure from the euro zone, will influence the other countries with common currency.

Tensed situation of Greece clearly overvalued EUR/USD. Main currency pair dropped below 1.1300. However, if the upcoming hours or days would bring any understanding, which is still a basis scenario, we could expect the eurodollar's increase, even up to the areas of 1.1500. On the other hand, the extending discussion about this topic and greater and greater risk of Greece's departure from the euro zone, can cause that we will pay less than 1.1200 per euro.

One should also notice, that even if the understanding is not achieved, Greece will probably receive an offer of conducting a referendum, which will concern remaining in the euro zone, as well as continuing the reforms. This solution, however, will significantly increase the aversion towards risk, and EUR/USD would probably drop clearly below 1.10 until then.

Weaker franc

Apart from the Greece's theme, we also had another story on the market. Throughout the bigger part of the week, franc was clearly wearing off. The EUR/CHF pair has come to the areas of 1.08, which was the highest level since the famous resignation of SNB from maintaining the euro-franc relation above 1.20. The direct reason of Swiss currency's depreciation, was quite a definite standpoint of SNB chief, during his appearance on one of Brussels' universities.

Thomas Jordan said in Belgium that the franc is overvalued in relation to other currencies, and the policy of the negative interest rates should at some point discourage the investors to locate their capital in assets denominated in CHF. The SNB chief also claimed, that the monetary authorities will intervene on the market in order to weaken the franc, if the assumptions of monetary policy require such actions.

On the other hand, Reuters informed yesterday that the currency dealers speculate about the SNB buying dollars and selling francs. Today however, a bigger part of the franc's weakening has been corrected by anxieties related with Greece. If the Greek problems are solved within the next days, we can expect EUR/CHF reaching the areas of 1.08, which would also convert on drops of CHF/PLN in the areas of 3.85.

No greater changes on zloty

The domestic currency was quite calm throughout the passed week. We could even observe its relative strengthening. Despite quite average data from national economy, EUR/PLN dropped in the areas of 4.16 on Thursday. However, the increase of risk aversion, which was a result of the maintenance of tension related with Greece, caused the euro to costs approximately 4.18 PLN again.

Throughout the bigger part of the week, we observed the franc's weakening against the PLN. It was mainly caused by the drop of CHF value on the global market. This resulted in the Swiss currency reaching 3.85 PLN. It was the lowest level since January 15th. Today, on the other hand, due to the zloty's weakening against the euro and the drops on EUR/CHF, we have to pay about 3.90 per franc again.

Just like in case of the global market, the situation on the zloty is in a significant part related with the events around Greece. Thus, if the Greek case is solved within the upcoming days, which according to us is still a basis scenario, we can expect the return of EUR/PLN in the areas of 4.15, and CHF/PLN will probably drop below 3.85.

On the other hand, if the diplomatic conversations aren't successful, and the chances for understanding are clearly decreasing, it is not excluded that EUR/PLN would grow clearly above 4.20. Swiss currency could then again cross the round level of 4.00 PLN.


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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