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Daily analysis 16.07.2013

, author:

Marcin Lipka

Weaker then expected data from the US and Asmussen comments gave some support to the EUR/USD. A set of macro data today. Scenarios regarding Ben Bernanke testimony. The EUR/PLN is slightly below 4.30 level. The inflation data from the Polish economy didn't affect the local currency.

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

  • 11.00 CET: CPI form the Euroz Zone (survey: 1.6%y/y; base: 1.2%y/y)
  • 11.00 CET: ZEW index from Germany (survey: 40 points)
  • 14.30 CET: CPI form the US (survey: 1.6% y/y and Ex Food & Energy 1.6% y/y)
  • 15.15 CET: Industrial production from the US (survey: 0.3%)

EUR/USD is holding above 1.30. Macro data. Bernanke tomorrow.

The EUR/USD again managed to hold the 1.30 level. It was supported by the worse-then-expected retail sales form the US (both the headline and the core). A bit surprising was also a statement form Jorg Asmussen. The ECB member, after last week pretty dovish comments on the future monetary policy, was quite hawkish yesterday. Despite that he stressed that inflation expectations are “tightly anchored” he also noted that ECB “studying inflation very very exactly” and will “act against inflation as soon as we see it”.

Today's macro data should be seen by market participants straightforward. Better then expected ZEW reading and higher then anticipated inflation in the EuroZone should support the EUR/USD. The most traded currency pair should also be supported if we get lower then forecasted CPI form and industrial production from the US. Inflation data form the US seems to be more closely watched than the European one (can be an argument to put forward the tapering).

Tomorrow we are having Ben Bernanke hearing before House Financial Services Committee. As Victoria McGrane reports in the Wall Street Journal the testimony will be released 1.5 hour earlier then the actual hearing starts (16.00 CET). Later it the Fed Chairman will be answering for questions. The Financial Times reports in article “Bernanke faces grilling over bond buying” that the key question is whether we get any hint regarding the QE tapering time table. The “FT” also notes that the “In his prepared testimony [the one released earlier] the Fed Chair is bound to stick close to existing FOMC policy, so any new developments will come in the question and answer session”. Moreover Reuters cites currency trader Andrew Dilz form Tempus Inc in Washington. He claims that “If he [Bernanke] reiterates his comments from last week, I think we're going to see a little bit more dollar weakness across the board as bets on a September wind-down of QE start looking a little bit further form the truth”. Summarizing the EUR/USD should be under the influence of macro data today, but the some longer term outlook we should get tomorrow after Bernanke testimony.

The zloty holds recent gains

The EUR/PLN was able to stay under 4.30 level. The Polish currency was supported by pretty high EUR/USD valuation and some hefty gains of the Mexican peso and Turkish lira. There was no reaction on the market regarding the lowest since 1989 inflation reading (0.2% y/y). The latest MPC statement and recent comments form the Committee members (even these considered as dovish) show that there is a low probability of any rate move this year. Additionally most of both privet and government economists expected that the inflation will pick up later this year and will be close to 1% level (as PAP reports).

In a scenario when EM currencies gain value the zloty also will be benefiting, but the main driver this week will be Ben Bernanke statement. If market gets nervous after the Fed Chairman statement we can expect that EUR/PLN rise above 4.30 pretty quickly. On the other hand if he signals that September tapering is not certain it is possible that the zloty appreciate toward 4.25 per euro.

Expected levels of PLN according to the EUR/USD rate

Kurs EUR/USD 1.3050-1.3150 1.3150-1.3250 1.2950-1.3050
Kurs EUR/PLN 4.2800-4.3200 4.2800-4.3200 4.3100-4.3500
Kurs USD/PLN 3.2800-3.3200 3.2400-3.2800 3.3200-3.3600
Kurs CHF/PLN 3.4600-3.5000 3.4500-3.4900 3.4700-3.5100

Expected GBP/PLN levels according to the GBP/PLN rate

Kurs GBP/USD 1.5050-1.5150 1.5150-1.5250 1.4950-1.5050
Kurs GBP/PLN 4.9900-5.0300 5.0100-5.0500 4.9700-5.0100

Overall technical situation on the analyzed pairs

The EUR/USD is still bullish. The GBP/PLN generated sell signal sliding under 4.97. On USD/PLN and CHF/PLN shorts are preferred. The EUR/PLN is close to generate the sell signal.

Technicznie EUR/USD: Technical analysis EUR/USD: the EUR/USD moved quite substantially last. It broke many resistance levels and stopped around 1.32. The upside trend dominates now with target at 1.3200 and support around 1.3070. The next support is around 1.2950. If we fall under that level is should generate a sell signal with a target around 1.28.

Wykres

Technicznie EUR/PLN: if we fall under 4.28 a sell signal will be generated with a target around 4.22. Currently the bullish trend remains with a medium-term target at 4.40.

Wykres

Technicznie USD/PLN: a fall under 3.28 was a sell signal. The USD/PLN target is 3.18-3.14 now. A comeback above 3.34 again favors bulls.

Wykres

Technicznie CHF/PLN: the sell signal was generated after falling under 3.48. The target is 3.42 now. Alternatively the rise over 3.52 should be bullish.

Wykres

Technicznie GBP/PLN: the sell signal was generated after sliding under 4.97 with a target around 4.9 and in extension even toward 4.8. Alternatively a rise over 5.04 is an indication of bulls' return.

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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