Daily analysis 05.09.2013:
The data on Wednesday didn't give any hint regarding the further EUR/USD valuation. Mario Draghi conference and macro reports from the US will be in focus. No surprises during Belka's conference yesterday. Bonds and stocks nervousness hasn't impacted the zloty yet.
Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.
- 13.45 CET: EBC announces interest rate decision (survey: unchanged at 0.5%)
- 14.15 CET: ADP report from the USD (survey: 182k)
- 14.30 CET: Mario Draghi conference
- 14.30 CET: Jobless claims from the USD (survey: 330k)
- 16.00 CET: Factory orders from the US (survey: minus 3.4%)
- 16.00 CET: non-manufacturing ISM form the USD (survey 55.0 points)
Still in waiting mode
Wednesday's trading wasn't exciting on the EUR/USD. The afternoon slight rise above 1.3200 was rather the result of a “risk on” trade on US equities than trade deficit data which was broadly in the line. We didn't get any new information form the Beige Book (except a slight hint on better job market condition). The Fed claims that “Eight Districts characterized growth as moderate; of the remaining four, Boston, Atlanta, and San Francisco reported modest growth, and Chicago indicated activity had improved”. The Federal Reserve also reported that “Consumer spending rose in most Districts, reflecting, in part, strong demand for automobiles and housing-related goods”. On the jobs we can see a light improvement “For most occupations and industries, hiring held steady or increased modestly relative to the prior reporting period.” whereas in the previous “Book” Fed reported that “Hiring held steady or increased at a measured pace in most Districts, with some contacts noting reluctance to hire permanent or full-time workers.”. It can be an indication that one of the jobs employment obstacles have been diminishing (kind of sooner tapering indication).
Today the news of the day will be ECB conference. The market mainly try to evaluate whether the Bank's chief Mario Draghi can be a bit less dovish than previously (reminder that since July we have forward guidance that the interest rate can either fall or remain at current level for an extended period of time). The ECB also plans to release new economy estimates. It is expected that fresh projections can lower the inflation (bearish for the euro), but upgrade the growth which can level off the negative price effect. Between the rate decision and the conference we have also the ADP report. Even though it is not perfectly correlated with the NPF any strong deviation from the estimates can either put pressure on the dollar or push it higher. If all data is close to surveys (including ISM) than the market should stay fairly balance (with exception during the Draghi conference) and wait for Friday's Payrolls.
Summarizing the EUR/USD should stay close to the 1.3200 level. Most of volatility is expected during the ECB chief conference. However, taking into the account the current market conditions final decision will be probably proceeded after the NFP data.
No surprises from Belka. Foreign institutions on pension reform
Polish MPC members, in line with expectations, left the interest rates unchanged leaving the benchmark at 2.5%. In the statement we have also an indication, frequently mentioned by Members, that “the Council's assessment interest rates should be kept unchanged at least until the end of 2013, which will support return of inflation to the target in the medium term”.
On Wednesday we had quite a volatility on stocks and bonds. The PLN remained fairly unchanged, but if the bearish sentiment progresses, we can expect an additional pressure on the zloty. In the afternoon we had a plethora of comments form both government and private institutions officials. I want to present two foreign statements which seem to be more balanced (but rather negative on the project). Societe Generale claims that “Plans for pension funds not market-firendly” and it “reinforces its bearish view on the zloty”. On the other hand Nomura says that “mrkt 'overreacting' to Polish pensions plan but also adding that “Tusk pension plan is still 'step in wrong direction'”.
Summarizing the zloty should remain fairly stable today, but if the bond and stock sell-off increase we will expected an additional pressure on the PLN. It can also have more long-term effects (credibility?) but, being honest, regarding all global issues in the recent years it should be forget sooner rather than later.
Expected levels of PLN according to the EUR/USD rate:
Expected GBP/PLN levels according to the GBP/PLN rate:
The sell signal was generated on the EUR/USD. Bullish tendency on all Polish pairs.
Technical analysis EUR/USD: the slide under 1.3200 should generates the sell signal with the target at 1.30 (the 200 MA will not be a key support now). The comeback to the bullish trend possible after rising over 1.3300.
Technical analysis EUR/PLN: the move over 4.26 generated a buy signal with a first target at 4.30 (almost reached). The next target is 4.35. A slide under 4.24 suggests a return to range trade 4.22-4.26. If the EUR/PLN slides under 4.22 it generates a sell signal.
Technical analysis USD/PLN: the rise above 3.22 generates a buy signal with a target at 3.30. The comeback under 3.18 negates the bullish singal./p>
Technical analysis CHF/PLN: the buy signal was generated on CHF/PLN with a first target at 3.52. On the other hand the slide under 3.43 should favor a range-trade between 3.40-3.45.
Technical analysis GBP/PLN: we are getting closer to generate the buy signal (after breaking 5.00) with the target around 5.10. Staying under 5.00 still prefers the short positions.
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