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Daily analysis 08.01.2013

, author:

Marcin Lipka

Another day with decorrelation between stocks, bonds and currencies. Japan will be buying ESM bonds (to avoid European criticism regarding aggressive monetary policy?). On the Polish markets we are waiting for the MPC meeting results. In the meantime the market has received unofficial unemployment results (rose by 0.4% to 13.3% in December), and projected date to join the Eurozone (2020). We have also short note from Witold Kozinski, Central Bank deputy governor regarding currency intervention.

Macro data (CET- Central European Time):

  • No major macro data

This time stocks down, EUR/USD up and yields on peripheries debt rose.

Monday was another day when the long lasting correlation was upside-down. In yesterday's analysis I did underline the possible reasons of the matter. It is possible that after EBC meeting and when the U.S earning seasons begins (today is the first Q4 report from Alcoa) the situation will come back to normal. It means that when stocks are rising EUR/USD is also up (or at least not falling), and also when Spanish and Italian debt yields are down the euro in hand with CEE currencies are increasing in value . Another element which can help markets to resume the usual correlation is FED meeting on January 30. If FOMC (2 new ultra dovish governors are coming) gives some hints, that the last “Minutes” were to hawkish it can reduce the risk aversion on all assets (without exceptions).

Taro Aso announces ESM bond purchase. Will it help EUR/USD?

Japanese Prime Minister tries to weaken the YEN with all available means. Such an aggressive stance returns some criticism from the largest trade partners (such as South Korea and U.S). To lower the criticism from EU and further depreciate the currency Japanese Finance Ministry will buy ESM bonds using its currency reserves. However, Japan has most reserves denominated in USD, so the sale of USD and purchase of EUR will suppose to strength euro firstly. Yen can get only weaker indirectly (i.e. by more risk appetite). In the following days we hope to get some more data about the issue (especially the value of operation).

Another elements which can depreciate PLN.

Since the beginning of the year PLN is under pressure from the global and local factors. After statements from chief Ministry of Finance economist Ludwik Kotecki regarding lower then expected Q4 GDP growth, and hawkish comments from FED, yesterday we received preliminary unemployment rate which jumped from 12.9% to 13.3%. Analyzing the recent trends we can expect more layoffs and the rate rise to over 14% at the end of February 2013. Today the Polish newspaper “Rzeczpospolita” published Tomasz Ciszak article regarding the Eurozone accession. The director of central bank's European Integration Department claims that Poland should adopt euro in 2020 and fix zloty in ERM2 in 2017. The NBP is overall skeptical regarding the euro (more about the issue in December 17th analysis). The date however is quite distant (also to faraway for markets) form the government plans (also to faraway for markets in my opinion) which would like to join the Eurozone in 2016-2017. Another element which can keep pressure on PLN (in the medium term) was also today's statement from deputy governor of central bank Witold Koziński. He told PAP that if PLN appreciate to fast the Bank can react. The last intervention to depreciate the zloty was in April 2010 at the level of around 3.8000 per EUR and it was quite successful. From the fundamentals in the medium term (around half of the year) the PLN has rather slim chances to successfully test 4.0000 level. If the macro environment does not change the PLN is suppose to be stable with a light trend toward depreciation (up to 4.20-4.25 per EUR).

Expected levels of PLN according to the EUR/USD value:

EUR/USD 1.3050-1.3150 1.3150-1.3250 1.2950-1.3050
EUR/PLN 4.1300-4.1000 4.1300-4.1000 4.1400-4.1100
USD/PLN 3.1700-3.1300 3.1400-3.1100 3.1900-3.1500
CHF/PLN 3.4100-3.3800 3.4100-3.3800 3.4200-3.3900

Technical analysis EUR/USD: we bounced back form support level around 1.3000. It improved the technical situation but only the closing above 1.3150 will give the signal to bulls to open long positions.

Wykres

Technical analysis EUR/PLN: we are still on the resistance level (50 DMA and 23.6% Fibonacci retracement level). The breakout of this levels opens the way to 4.1650-4.1800. If the EUR/PLN bounce back from 4.1200 we can see the come back to the range trade (4.06-4.12).

Wykres

Technical analysis USD/PLN: the fist strong bullish move lost the momentum a bit and bears secured the resistance around 3.1600 level with come back to 3.1450. However, there is still more probability for the upside move.

Wykres

Technical analysis CHF/PLN: CHF/PLN tries another time to break resistance level around 3.41 (50 DMA and 23.6% Fibonacci retracement level). The breakout of that level increase the odds for move toward 3.46 (200 DMA and 38.2% Fibonacci retracement. On the other hand if 3.41 holds we can come back to the range trade (3.36-3.40).

Wykres

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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