Daily analysis 07.11.2012

, author:

Marcin Lipka

EUR/USD climbs after Obama's victory. Juncker is confident that Greek parliament will accept the austerity package. It also supports the common currency.

Tuesday’s calm EUR/USD reaction after weak data from Germany (factory orders fell 3.3% m/m whereas expectations were around decrease of 0.5% m/m) gave a good opportunity to the bulls. That chances were used several hours later during the Asian session. The first impulse to the upward move were comments made by head of the Euro group Jean-Claude Juncker in Singapore. He was certain that” Greek vote on austerity will be yes”. The next stimulus for the EUR was Obama's victory, which was seen at markets as bearish for USD. In the outcome of this two events resulted that common currency climbed to 1.2873.

The voting in Athens is scheduled at 20.00 local time (19.00 CET).

Further gains of the EUR/USD can be spurred by news from Greece. The strikes in Athens have been relatively calm and the austerity voting will be held today at 20.00 local time (19.00 CET). If the parliament approves the crisis package it will probably give a substantial boost the the market sentiment, and to the common currency. It will also allow to increase the odds for the positive outcome from the November 12th Euro group meeting. It is expected that Euro-zone finance ministers will approve the next aid tranche (31.5 billion EUR) for Athens, and try reduce the Greek debt burden (by buying back bonds with new loans from ESM?).

25 bp rate reduction is almost sure in Poland. At 16.00 CET the MPC conference.

The main news from Poland is MPC rate decision. The market expects the cut by 25bp and change to the dovish stance. It will be also interesting how the committee sees the future inflation. Economist surveyed by Bloomberg expect the inflation will back to the target (2.5%) in the Q2 of 2013. It will be crucial how the CPI is seen by the MPC.

Expected levels of the PLN depending on EUR/USD value:

EUR/USD 1.2850-1.2950 1.2950-1.3050 1.2750-1.2850

Technical analysis EUR/USD: there is still higher for the downward move. If EUR/USD climbs above 1.2950 (over 50DMA, trend-line and 23.6% Fibonacci retracement level) it will be a strong by signal. On the other hand breaking the support level around 1.2740 can spur move toward 1.2600 in the following days.

Technical analysis EUR/PLN: It was another day with low volatility. Both resistance level around 4.1200, and support level 50 DMA (41050) are still valid. If EUR/PLN breaks 4.1200 the expected move is toward 4.1700. The slide below 4.1050 is a selling signal with target around 4.0750.

Technical analysis USD/PLN: it is expected that USD/PLN will appreciate with the target around 3.27-3.29. Alternatively the move below 3.1650 (below the downtrend line, 50 DMA, and 23.6 Fibonacci retracemtn level) will target the level around 3.1250.

Technical analysis CHF/PLN: similarly to EUR/PLN is pretty stable. If it breaks above 3.42 the expected move is toward 3.47. If it slide under 3.3800 we can even see the move toward 3.33.

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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