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Daily analysis 02.06.2015

, author:

Marcin Lipka

Greece creditors meeting in Berlin. The Norwegian krona is under pressure of the weaker PMI data, and the perspective of cutting interest rates. The yen at its twelve year minimum in relation to the dollar. Negative sentiment towards the zloty still remains.

Most important macro data (CET). Estimations of macro data are based on Bloomberg's information, unless marked otherwise.

  • 16.00: Orders in industry from the USA (estimations: minus 0.1%, the data for April)

Creditor's debates in Berlin

Last night in Berlin a meeting of Greece's creditors occurred. Its participants were, among others, the chairman of the EBC, the chairwoman of the IMF, Germany's chancellor, France's president, and the chairman of the European Commission. Barely any specific details from those discussions reached the media.

Only Pierre Moscovici when visiting one of the French radio stations, claimed that “real progress” is visible in the negotiations between Greece and troika. However, the commissioner responsible for economic matters in the EU, did not refer directly to the creditors' conversations.

Prime minister Tsipras also did not state any comments directly regarding the discussions held in Berlin. In his statement for the Greek television, he did not comment on the creditors' offers. At the same time he said that his country assumed some realistic plans to reform itself and it is ready to negotiate.

It can not be excluded that this meeting was a consequence of the exchanges over the weekend between Merkel and Tsipras. Perhaps some settlements were made between those two politicians, and now the rest of the creditors have established a common standpoint.

It is also difficult to expect Greece to react to troika's propositions optimistically. Negotiations that have lasted for many months, usually end at the last call. And while dealing with an unpredictable partner, this time can yet be extended. Thus, in general the risk of Greece's bankruptcy, introduction of control of the capital, or exiting the eurozone is still definitely less likely than a chance for understanding.

A clear wear off of the Norwegian krona

Yesterday, the Norwegian krona wore off in relation to the main currencies by approximately two percent. The catalyst of this movement was the weak reading of the PMI index. Instead of remaining on the level of 50, it decreased down to 46.6 points. This increases the risk that the data about the industrial production planned for the 5th of June can also be disappointing.

However, the market is primarily afraid of the central bank's decision. Its next summit is planned for the 18th of June. The last time when Norges Bank decreased the credit's value, was in December 2014. However, from that moment the bank suggested that there still is a further risk of monetary soothing. The worse condition of the economy, can thus cause an even bigger decrease. Also, the krona was not reacting positively to the increase in the price of oil. This can also express anxiety regarding the future monetary policy.

The weak yen

The Japanese currency has reached a twelve year minimum in relation to the American dollar. The yen is also weaker in relation to the other currencies. One of the arguments explaining the JPY worse condition, are the capital transfers from and to Japan.

The national pension fund is investing increasingly more money abroad, however it probably does not secure the majority of its positions on the currency market. On the other hand, the foreign investors who are active on the capital market are securing their positions. Thus, the demand for the yen is limited.

The yen also wore off after an economic preview made by the IMF. Its conclusions were published on the 22nd of May. In many places the Fund suggests that the Bank of Japan should decide to increase quantitative easing. There were also suggestions about the target of a two percent level of inflation. This increases the chance for accelerating the assets purchase by the BoJ.

The zloty remains under pressure

The national currency is still under the pressure of the situation related to Greece, and the weaker macro data from Poland. Additionally, the national investors are definitely more sceptical about the situation's development. Thus, the reactions for good information, are rather dim. The behaviour of the debt instruments' market has also a negative impact on the zloty. Despite the relatively high profitability on the bonds, the demand is still limited.

One should not expect much after tomorrow's summit of the MPC. The Council has no reason to change their approach regarding the maintenance of the neutral monetary policy. During the press conference, some questions will probably concern the rumours about chairman Belka's leaving his position prematurely. It can also not be excluded that the matters of changes on the peaks of authority, can also be touched on during tomorrow’s summit.

Considering the recent behaviour of the zloty, we need to receive strong impulses from the global market (weak macro data from the other side of the ocean, specific solutions regarding Greece), in order to see a visible enforcement of the national currency. Until then, the PLN should remain under pressure.

Anticipated levels of PLN according to the EUR/USD rate:

Range EUR/USD 1.0850-1.0950 1.0750-1.0850 1.0950-1.1050
Range EUR/PLN 4.1000-4.1400 4.1000-4.1400 4.1000-4.1400
Range USD/PLN 3.7600-3.8000 3.8000-3.8400 3.7200-3.7600
Range CHF/PLN 3.9800-4.0200 3.9800-4.0200 3.9800-4.0200

Anticipated levels of GBP/PLN according to the GBP/USD rate:

Range GBP/USD 1.5250-1.5350 1.5150-1.5250 1.5350-1.5450
Range GBP/PLN 5.7000-5.7400 5.6600-5.7000 5.7400-5.7800

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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