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Daily analysis 27.06.2013

, author:

Marcin Lipka

The EUR/USD briefly slided under 1.30 level yesterday. Today we are slightly higher. Much worse-then-expected final GDP reading from the U.S. ECB Mario Draghi and FOMC member Jeffrey Lacker didn't move the market. The zloty is moving in line with the EUR/USD.

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

  • Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted
  • 14.30 CET: PCE core (survey: 0.1 m/m, 1.1 y/y)

Better-then-expected data stopped EUR/USD correction

Yesterday the macro calendar was pretty empty. We had only the third GDP reading from the U.S. Usually the final data does not differ from the previous estimates. This time, however, was different. The last reading turned out to be 0.6 percentage point lower then the market expected. The U.S growth was just 1.8%. After the report the markets should have reacted positively (dollar drop and stocks go up). That scenario was half-true. Equities jumped (on the view that historical data should push the Fed for more QE, but the current durable goods, housing, or consumer confidence are quite strong), but the dollar fall only briefly. During the U.S session bears pushed the EUR/USD under 1.30 level. Such a behavior can be explained in two ways. The market either “wanted” to test 1.30 level to activate some “stop losses” and then initiate the bullish move, or the GDP data was used to open more shorts, so the EUR/USD rise was short-lived.

In the meantime we had two statements form central banks representatives (neutral for the EUR/USD). The ECB chief Mario Draghi repeated that the “monetary policy will stay accommodative”, but the central bank cannot create the economic growth. On the other hand non-voting Fed member, Jeffrey Lacker (hawk) said that “labor market data is more important then GDP for Fed” and added that Federal Reserve is “not anywhere near cutting balance sheet”.

Summarizing the EUR/USD is currently in an important moment. A slide under 1.30 (by more then 50 pips) is a bearish signal and we can quickly test 1.28. On the other hand if the recent lows hold, then we can expected a correction and move toward 1.32.

EUR/PLN stabilizes close to the recent highs

The zloty is getting more depended on the EUR/USD. Its slide pushes the EUR/PLN higher and keeps pressure on the Polish currency. There is a high probability that the current scenario will remain in place. Additionally if the PLN rebounds, then it will probably be used to sell the zloty. In the short and medium term the approach toward the EM currencies is still negative (not only due to QE tapering, but also regarding some social-economic issues in Turkey, Brazil, South Africa or China). Concerning that issues the zloty should be still under pressure.

I don't expect any major moves on the zloty till the end of the week. The EUR/PLN should be traded between 4.30-4.35.

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

EUR/USD 1.3050-1.3150 1.2950-1.3050 1.3150-1.3250
EUR/PLN 4.3000-4.3400 4.3100-4.3500 4.2900-4.3300
USD/PLN 3.2900-3.3300 3.3300-3.3700 3.2500-3.2900
CHF/PLN 3.5000-3.5400 3.5100-3.5500 3.4900-3.5300

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

GBP/USD 1.5250-1.5350 1.5150-1.5250 1.5350-1.5450
GBP/PLN 5.0700-5.1100 5.0500-5.0900 5.0900-5.1300

Overall technical situation on the analyzed pairs:

EUR/USD slided under 1.3070 (50 and 200 DMA) is an indication confirming the sliding trend. The zloty is still under pressure.

Technical analysis EUR/USD: we get to the first target around 1.30. The next one is around 1.2850-1.2800. Alternatively the longs should open above 1.32.

Wykres

Technical analysis EUR/PLN: the situation is still bullish. The target remains 4.40. Only the slide under 4.28 should bring more bears and push the pair toward 4.22.

Wykres

Technical analysis USD/PLN: the rise over 3.22 was a strong buying signal. The target for USD/PLN is around 3.30. If the PLN weakness continues, then the next target will be around 3.35 and in extension 3.5.

Wykres

Technical analysis CHF/PLN: we broke 3.50, so the next target is around 3.60. The slide under 4.38 prefers the selling side.

Wykres

Technical analysis GBP/PLN: the 5.10 target was reached. The next target is around 5.20-5.22. The slide under 4.97 should favor bears.

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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