Daily analysis 04.05.2015

, author:

Piotr Lonczak

The euro wore off due to the lack of an announced ending of negotiations between Greece and Brussels, and mixed data about business cycle. The zloty is growing in relation to the euro, despite the third in a row decrease of the PMI index.

The last week brought about speculations that Greece is willing to sign an agreement with the international creditors, by the end of the last Sunday. Such expectations were being built, on the basis of words said by prime minister Alexis Tsipras. However, it's Monday, and there is still no news about the end of the negotiations. The only thing that press agencies are disclosing, are very intensive conversations.

On the other hand, the Greek government sources cited by Bloomberg, are speaking about the negotiations finishing on Wednesday. Such a solution will allow the Eurogroup countries to make a decision about aid, during the closest summit on May 11th.

The pressure on Greece grows everyday.This month, the country has to pay its debts to the International Monetary Fund. The value is approximately one billion euro.

The Syriza can soon face the danger of becoming insolvent, which would be a very bad solution, especially for the Greeks. This situation means, that one should expect a more compromising tone from Athens. The decision of marginalizing the role of Yanis Varoufakis (the minister of finance) in the negotiations, can be considered as evidence of soothing the Greek attitude.

The PMI are showing the dissection

The final readings of the PMI indexes, were showing the dissection between the eurozone's central and peripheral countries. Even though, the German industry has slowed down a little bit, the result of 52 points is satisfying. When it comes to the countries with fiscal problems, Spain achieved a very good result. Its industrial index has reached 54.2 points.

On the other hand, France's results are creating a bigger disturbance. The slowdown there has increased, and the index dropped down to 48 points, from the previous 48.8. Also Greece, which is the most indebted country in the monetary union, is experiencing a slowdown in their industry. The index has dropped down to only 46.5 points, in relation to the previous 48.9.

The data indicate, despite that some signals can be seen as evidence of improvement in the monetary union's condition (the data about the credit in the private sector have a significant meaning here – it has recorded an increase for the first time in three years), there is still a long way ahead for the eurozone countries, to get back on the path of constant increase.

The EUR/USD pair returns to the drops. Mixed economic data combined with the uncertainty concerning Greece, have lead to a decrease in the euro, for the highest level since the end of February.

The zloty after the data

Today's data concerning the PMI index for the Polish industry, suggest that the increase is beginning to slowdown. In May, the index dropped down to 54 points, in relation to 54.8 the previous month. It was the third decrease in a row. Just like the last time, the report in May was below market expectations.

Although the result above 50 points indicates that the sector is developing, another month of decreases and the indexes structure melt the optimism. The data can suggest the enforcement of disadvantageous tendencies in the economy, after the successful first quarter of 2015. The first three months of the year, have brought some very good data from the industry and the labour market. The decrease of the unemployment rate was especially motivating.

The situation can change due to the tendencies indicated by the PMI index. The result of 54 points itself appears to be satisfying. However, the report indicates that the increase tempo of new orders has slowed down. It can mean a lower activity of the companies in the forthcoming quarters. The increase in the amount of new export orders can be a certain consolation, which gives hope for soothing the slowdown on the internal market.

Employment has increased constantly for twenty one months. However, it slowed down in April, after a record result in March. We can also find suggestions here, that the forthcoming months can be less successful.

The zloty has enforced in its relation to the euro and the franc, but it wore off to the dollar and the pound. It is difficult to describe today's data as weak, although they were worse than expected. Thus, the zloty's return to appreciation in relation to the main currency pairs, should occur soon, along with the enforcement of the positive sentiment on the wide market.

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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