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Daily analysis 07.09.2015

, author:

Marcin Lipka

Vague announcement from the G20 summit and mixed statements from particular members do not have an impact on the market. Political changes are not a danger for the agreement with the creditors for the time being. The zloty remains relatively stable.

Most important macro data (CET – Central European Time). Estimations of macro data are based on Bloomberg information, unless marked otherwise.

  • Tomorrow at approximately 3 AM: Data regarding the Chinese foreign trade for August (estimations: surplus in trade account 48 billion USD; export minus 6.6% y/y; import minus 7.9% y/y).

Vague G20 summit

The meeting of the representatives of countries and central banks owning more than 80% of the global GDP did not bring any clear breakthrough. In its official announcement, the G20 established that its members will cease the competitive devaluation and any forms of protectionism.

Additionally, the G20 members are to be “precise in forming theirs actions, especially if they concern the monetary policy, in order to minimize their negative impact, decrease uncertainty, and promote clarity”. Of course, this remark referred to Beijing. Due to the devaluation of the renminbi and supposed interventions on the capital market, there appeared anxieties of the condition of the Chinese economy and its impact on other countries in the region.

Also, the G20 declared that the reason for the anxieties of the state of the global economy, are problems in communication. “They (the Chinese – author's footnote) accepted the fact that they could have communicated better”, said the Italian minister of finance Pier Carlo Padoan, who was quoted by The Wall Street Journal.

A fact worth noting is the misunderstanding caused by the statements from Taro Aso. Quoting his discussion with the chairman of the Chinese central bank, the Japanese minister of finance said that Zhou Xiaochuan claimed that the bubble in his country has already burst. After this statement a press conference of the chairman of the PBOC foreign department was held, on which it has been explained that the chairman of the central bank meant the capital market, and not the economy.

In general, it is doubtful that the G20 summit will calm the market down, even if the speculations regarding the Chinese slowdown are significantly exaggerated. That is why the coming data from China (tomorrow the foreign trade) and other emerging markets will determine whether the problems will disappear or increase. Additionally, the investors are waiting for a fiscal package that will stimulate the Chinese economy. However, it can be announced within the coming days, as well as months.

Changes in Greece

Very serious changes are taking place on the Greek political scene. This year Syriza had moments of more than a 20% advantage over the New Democracy. Now, it appears that it may lose the majority in parliament during the elections planned for 20th September.

According to Kapa Poll, the party of Alexis Tsipras is supported by 26.5% of respondents, while the New Democracy by 25.9%. So there is a question – is this a danger for the agreement between Greece and its creditors established in July? According to the news so far, probably not.

In his interview for Bloomberg, the New Democracy leader stated that irrespective of his party being in the opposition or coalition, it will support the agreement with Brussels. Thus, the risk regarding Greece did not increase significantly two weeks before the elections.

Few words about the foreign market

The G20 summit that finished on Saturday did not bring much information for the market. Thus, the investors (also the currency ones) will wait for macroeconomic data, especially from China. Tomorrow's publications about the Chinese foreign trade will probably be observed carefully. If it is worse than estimations, the euro should enforce to the majority of currencies (including the dollar), based on the recent movements.

Stabilisation remains the base case scenario

The reaction of the zloty for any market commotions is still very calm, especially if its behaviour is compared to the Asian or Latin American currencies. For the time being there are no reasons for this situation to change.

However, if the data from China appear much worse than expected and it translates to the morning condition of the European stock markets, the EUR/PLN can approach the area of 4.25 during Tuesday's session. Without a strong negative impulse from the outside, the base case scenario should be a stabilisation in the area of 4.23 per euro, and 3.90 per franc. Also the dollar should not go far from the area of 3.80.

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

Range EUR/USD 1.1150-1.1250 1.1250-1.1350 1.1050-1.1150
Range EUR/PLN 4.2100-4.2500 4.2200-4.2600 4.2000-4.2400
Range USD/PLN 3.7500-3.7900 3.7200-3.7600 3.7900-3.8300
Range CHF/PLN 3.8800-3.9200 3.8800-3.9200 3.8800-3.9200

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

Range GBP/USD 1.5250-1.5350 1.5150-1.5250 1.5350-1.5450
Range GBP/PLN 5.7800-5.8200 5.7600-5.8000 5.8000-5.8400

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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