Daily analysis 12.10.2012

, author:

Marcin Lipka

Better sentiment on markets after Lagarde speech. Bullish session on EUR/USD but U.S equities disappointed at the end.

The market is trying to pick up only the optimistic data again. From Lagarde's speech investors noticed only that Greece and Spain should get more time to deal with reforms and austerity. Also brief remarks made by President of the European Council Herman Van Rompuy that Euro breakup is „not really news anymore” has impacted positively the EUR/USD. Immediately comes a question whether this optimistic view can be transferred for the next days. Partly answer to this we can get after JP Morgan and Wells Fargo Q3 earnings (before the U.S market opens). If they beat analysts' expectations and the estimates for the next quarters will not be downward revised we can see the comeback to the bull market and test levels around 1.3000 by EUR/USD. On the other had if the reports fails to analysts' expectations we can observe another sluggish day on U.S market and EUR/USD under 1.2900.

At 15.55 CET University of Michigan index will be published. Concerning that the index is hovering around its highest levels I would rather expect the lower reading. Thursday’s jobless claims interestingly surprised. Published by U.S labor department jobless claims were 30k lower than expected. It spurred additional discussions about data manipulations. The labor department has not reviled how such a difference could happened claiming only that it was caused by one state. So next week we can expect the revised data.

On the Polish bond market we did see another record low yields on 10 year bonds. However it didn't result in strong PLN appreciation. Sometimes it happens that investors who are long Polish bonds they also sell PLN hedging against rapid PLN depreciation. Concerning that the correlation between 10-year Polish bonds and EUR/PLN is still positive the PLN should catch up bonds move, unless the situations on bonds reverses. Today’s second Tusk's expose can be softened by Belka comments. The President of National Bank of Poland said in Tokyo that: „creation of the Euro was mistake” and „Poland needs Euro breakup ruled out to consider join”. Investors can be surprised by such comments especially it isn't in Poland's interest to spur uncertainty concerning Euro-zone.

Expected levels of PLN in relation to EUR/USD rate:

EUR/USD 1.2850-1.2950 1.2750-1.2850 1.2950-1.3050
EUR/PLN 4.0900-4.0700 4.1100-4.0900 4.0700-4.0500
USD/PLN 3.1800-3.1400 3.2200-3.1800 3.1400-3.1000
CHF/PLN 3,3800-3.3600 3.4000-3.3800 3.3600-3.3400

Technical analysis of EUR/USD: coming back above 1.2920 i strong bullish signal. It will be key how EUR/USD will perform today. If it stays above the current levels we can expect the come back to the upward trend next week. On Monday we will witness the crossing 50 MA with 200 MA (golden cross) which is strong bullish signal. If EUR/USD fails to go up the strong support level is around 1.2770.

Technical analysis EUR/PLN: EUR/PLN is able to hold under 4.1000. Even with worsening sentiment PLN is strong and does not depreciate much. On the other hand the long the consolidation the stronger breakup. It can be also fastened by narrowing triangle sides and closeness of 50-day MA. For now EUR/PLN is neutral.

Technical analysis USD/PLN: the pair bounced from 23.6^ Fibonacci replacement. The resistance level around 3.1800-3.1900 is valid. If we don't break it we can see the attack on 3.0800 level.

Technical analysis CHF/PLN: the situation on CHF/PLN looks similarly to other PLN crosses. Key resistance level is around 3.4000-3.4100 were downtrend line, 50-day MA and 23.6% Fibonacci retracement are accumulated. If CHF/PLN fails to break it we can expect the further PLN appreciation.

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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