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Daily analysis 18.01.2013

, author:

Marcin Lipka

Better then expected data from China lifted EUR/USD. The USD/JPY pair is above 90 level thanks to several Japanese officials statements. In Poland the investors will be waiting for the industrial production data. The following week is going to be set up by BOJ meeting, ZEW index from Germany, and European PMI data.

Macro data (CET- Central European Time):

  • 14.00 CET: industrial production form Poland (surveys between minus 6.5% (Bloomberg), and minus 6.9)
  • 15.55 CET: University of Michigan index (survey: 75)

Chinese GDP better then estimates. 100-110 JPY per USD?

The market was not disappointed by the Chinese data. All macro indicators exceeded expectations. The GDP rose from 7.4% y/y to 7.9% (survey 7.8% y/y). Also production and retail sales were solid and above analyst estimates. Just after the releases EUR/USD didn't move much, but at the end of Asian session it was 20-30 pips higher hovering around its recent highs (1.3390) Another time the Japanese currency is in focus. This time the move was spurred by statements from retired Yale University professor who is also adviser to Prime Minister Abe. He claims that exchange around 100 YEN per USD will be good for the Japanese economy. Professor Hamada also noted that it would be a problem if yen fell to 110 per dollar (regarding the recent statement from economy minister who said that weak yen will be costly for individuals). There are also reports confirming discussion regarding unlimited QE in Japan. Reuters claims that at the coming meeting BOJ will decide to start the open easing with the expected inflation threshold at 2% (looks very similar to the FED's idea). It will be interesting to watch the outcome form the Tuesday central bank meeting. The high volatility on JPY pairs is guaranteed. The global easing (U.S, Japan, UK), bullish equities (yesterday S&P reached new 5-year high), much less stress regarding financial situation in the Eurozone (slide on peripheries bond yields) and recent EUR/CHF upside move are elements which will be supporting EUR/USD. Concerning the threats I can point out no GDP growth and still some issues with the Spanish solvency. In summary I see EUR/USD between 1.2800 and 1.4000 (Goldman Sachs target for 2013) in the following months.

PLN weaker before the key data.

It is hard to find the reasons for the morning zloty slide. The sentiment is pretty good, 10 years yields are trading under 4% mark and forint is stable. The only threat is the industrial production data. Analyzing the historical reports the survey almost never misses actual report by more then 5% (usually the difference is smaller then 2%). Trying to find some similar periods (regarding the economy) we can see that in January 2009 the data was missed by 3.6% (survey: minus 11.7%; actual: 15.3%). If today's reading is so weak, we would see the PLN depreciation around 0.02.-0.03 PLN. On the other hand the better then expected report (above minus 5.2% in September) should strengthen PLN and allow to stay in the 4.06-4.12 range).

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

EUR/USD 1.3250-1.3350 1.3350-1.3450 1.3150-1.3250
EUR/PLN 4.1000-4.1400 4.0900-4.1300 4.1100-4.1500
USD/PLN 3.0700-3.1100 3.0600-3.1000 3.1100-3.1500
CHF/PLN 3.2900-3.3300 3.2700-3.3100 3.3200-3.3500

Technical analysis EUR/USD: technical analysis still favors bulls. The target is 1.3450 for EUR/USD. The shorts should consider to open positions after eurodollar slides under 1.3200.

Wykres

Technical analysis EUR/PLN: the last close was again under 4.1200 mark, but also again the PLN is weaker at the opening (slightly above 4.1200). Staying at the resistance for long time will either result in strong upside move (toward 4.1650-4.18) or slide to the lower bound of range trend (4.06-4.12).

Wykres

Technical analysis USD/PLN: the bearish trend is still strong. We almost reached the target around 3.0500 (0.015 PLN above). The successful test of 3.05 will push USD/PLN toward 3.0000 levels. On the other hand the move above 3.1400 is an opportunity for bulls who can then expect move toward 3.25-3.27 (200 DMA resistance and 50% Fibonacci retracement level).

Wykres

Technical analysis CHF/PLN: after breaking 3.36 support we “made” 0.09 PLN (recent low at 3.2700) what means more then halfway toward the target at 3.2000. The trend is still strong and the probability to move above 3.36 is low.

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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