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Daily analysis 15.05.2015

, author:

Marcin Lipka

Today the data from the USA will again be at the centre of attention. Next series of negotiations regarding Greece is still without a breakthrough. Very good data from the national economy sustain positive sentiments on the zloty, and increase the chances of returning to appreciation.

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.

  • 14.00: Balance of current accounts from Poland (estimations: surplus on a level of 1 billion euro).
  • 14.30: Leading indicator of business from the state of New York (estimations: +5 points).
  • 15.15: Industrial production from the USA (estimations: no changes for April); use of production powers: 78.4%.
  • 16.00: Consumers' move published by the University of Michigan (estimations: 95.8 points).

USA is at the centre of attention again

For another time this week, the market should concentrate on publications from the other side of the ocean. The publication of industrial production should definitely be the most important. Throughout the recent month the condition of the manufacturing sector was very weak. It reflected a few readings below zero in a month to month relation and a decrease of the production down to barely 2% y/y. The economists estimate that the production did not change in April.

One can however expect that even despite the slow increase in retail sales, weak export or the slowdown of the mining sector, the reading can be slightly better than expected. It should be a result of making up for the losses caused by the winter and strikes on the West Coast. This would slightly raise the evaluation of the American currency. However, if the data disappoint and return to below zero, it would cause (along with the recent data about retail sales) a serious discussion about postponing the perspective of increasing interest rates beyond September 2015. This of course would be a negative signal for the American currency.

Publication of the consumers' sentiments are also worth noticing. They, on the other hand, can clearly go further from the recent records to limits of 95 points. This can also be influenced by increases in petrol prices and information about the worse condition of the American economy. If the production was close to consensus, this would be a good argument for the dollar weakening.

After the Empire State readings, it will be possible to recognize the market's sentiments to a certain degree. The leading indicator of business for the state of New York is first on the list of today's calendar. It is not a crucial publication, but it can set the players before the production and consumers' sentiments.

However, all the data will be widely analysed in the context of the future decision of the Federal Reserve. For now, the majority of the economists asked by the 'Wall Street Journal' assume an increase in interest rates in September. Despite the survey has been conducted before the revealence of the retail sale data, a series of reports is still needed, so that this relation would go towards the forthcoming summits.

Nothing new in Greece

For two days the representatives of Greece and Troika are negotiating again. The information passed on by the IMF, say that there is still not enough progress. It is likely that it mainly regards the reforms of the pension system and the labour market. However, it seems that Athens is willing to go on bigger compromises regarding privatisation.

The Greek minister of finance has been taken negatively again. Varoufakis said that Greece should not adopt the euro and should keep its own currency. However, he quickly added that it does not signify a will to exit the eurozone. Still, these statements seem to be missed.

Even if Greece adopting the common currency is a bad solution, referring to it negatively at this moment, will surely cause an unfavourable attitude from creditors. After all, the eurozone countries provide Greece's existence, and Athens is trying to negotiate better aid conditions from Brussels.

Few words about the foreign market

Today, the data from the other side of the ocean will again be at the centre of attention. The reading from the industrial production will be especially important. Should it be clearly below the forecasts, the session might close even below the level of 1.1450. However, there is a bigger chance that the publication will cross the consensus. This should slightly enforce the dollar by the end of this week.

Very good data from Poland

For a few days we have informed, that due to the good data of foreign trade, the reading of GDP can be 0.1-0.2 percent above the market consensus. As a result, the GUS published today that the national economy was developing at a tempo of 3.5%, while the economists' expectations were 3.3%.

Optimistic comments from the Central Statistical Office of Poland (GUS) vice-chairwoman are also worth noticing. Halina Dmochowska said that it was the consumption, investments and net export, which had a positive impact on the increases. One might claim, that it is a model situation, especially before they will be joined by the public investments from the latest Union perspective.

Apart from the optimistic data and their publication itself, professor Hausner's comments are also positive for the zloty. He said that the interest rates will have to be raised in the second half of 2016.

In conclusion, publications of the national economy, and the comments of the MPC representatives, should cause a return to an appreciation trend on the zloty, in its relation to the euro. In order to achieve this, the situation on the market of debt instruments needs to be relatively calm.

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

Range EUR/USD 1.1250-1.1350 1.1150-1.1250 1.1350-1.1450
Range EUR/PLN 4.0400-4.0800 4.0400-4.0800 4.0400-4.0800
Range USD/PLN 3.5500-3.5900 3.5900-3.6300 3.5200-3.5600
Range CHF/PLN 3.8600-3.9000 3.8600-3.9000 3.8600-3.9000

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

Range GBP/USD 1.5750-1.5850 1.5650-1.5750 1.5850-1.5950
Range GBP/PLN 5.6000-5.6400 5.5600-5.6000 5.6400-5.6800

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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