News

Afternoon analysis 29.04.2015

, author:

Piotr Lonczak

The dollar dropped after poor data from the US economy. The breakthrough in the eurozone due to the actions of the European Central Bank. Investors are waiting for the Federal Open Market Committee statement.

The reports from the US confirmed the notion that the expansion in the major world economy is getting weaker. In the first quarter of 2015 the GDP growth stood at 0.2 percent (annualized). A result in below 1 percent that was expected. In the previous three month period the economy grew 2.2 percent.

However, the report revealed that although poor readings on household spending and retail sales, the consumption increased 1.9 percent. A result little better than the forecast. In turn, the data on investment was weak as it dropped 23.1 percent due to limited outlays on drilling projects as the low level of oil price is hurting the industry.

Moreover, the strong dollar also hit the US economy. Exports dropped 7.2 percent after rising 4.5 percent in the preceding period.

Today's figures, although will not impact today's decision of the FOMC, will postpone the first interest rate hikes. As a result, the dollar posted significant losses after the release.

It is possible, that the move will be strengthened when the Fed's statement is released. The US monetary authorities may decide to show more dovish stance as recent data concerning the economy show weakness (more on the issue in our morning commentary).

The breakthrough

The data concerning money supply developments in the eurozone showed improvement in the field of private credit. In March the private credit growth stood at plus 0.1 percent on a yearly basis. A result in line with expectations. It has been the first increase since April 2012.

In mid 2014 the European Central Bank launched its first measures aimed at spurring the credit growth. Since then the Frankfurt-based institution has introduced as loans for the real economy (TLTRO), negative interest rates, private asset purchases. In the end, the ECB added the quantitative easing program in March 2015.

Recent information concerning the eurozone economy are more optimistic. Although the situation is still far from expected, it is consistently improving. Currently, the major risk factor is Greece, but the basis scenario is the country will finally reach an agreement with its international creditors. If this problem is removed, the sentiment towards the euro will improve, which will result in a stronger euro if the Fed decides to deffer interest rate hikes.

Stronger zloty

The zloty exploited weakness of the dollar. The USD/PLN dropped to the lowest level since mid January - it moved briefly below 3.60 zloty. The Polish currency managed to recoup some losses against the pound. In turn, the Polish currency dropped against the euro and the Swiss frank.

The perspective of more dovish Fed and the outlook for an improvement in the eurozone will result in favorable environment for risk assets. If the sentiment improves, the Polish currency will return to gains.


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.

Return to the main list


See also: