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Daily analysis 28.01.2013

, author:

Marcin Lipka

S&P 500 closes the week above 1500 points, and EUR/USD is hovering around 1.3450. Good sentiment in Europe after better then expected data from Germany should also stay this week. The market is starting to prepare to Wednesday's FOMC meeting. In Poland the PLN is waiting Tuesday's 2012 GDP reading.

Macro data (CET- Central European Time):

  • 16.00 CET: Durable goods orders in the States (survey: 2%)
  • 16.00 CET: Durable goods orders in the States ex transportation (survey: 0.8%)

EUR/USD gets boost from capital markets and German economy.

S&P 500 closed the week at 5 year highs. EUR/USD after recent gains is also just a shy of the yearly tops. The common currency has been reaching the new levels thanks to better then expected data from Germany – ZEW, PMI (both manufacturing and services), and IFO. On Friday the euro got some lift regarding repayment of LTRO. Analyst expected that banks would give back around 100 billion euro of cheap loans. The actual number was higher (137 billion euro) and accounted for around 30% of LTRO1. It shows that some constraints in the banking sector are easing. Much better sentiment, fund repatriation to Europe, and significantly decreased systemic risk (regarding the euro collapse) can result that November's Goldman Sachs forecast for EUR/USD (1.4000) can be reached quite soon.

FED in focus.

Due to lack of major data till Wednesday EUR/USD will be preparing to the FED meeting. The recent “Minutes” showed that “several” members of FOMC are in favor of reducing the QE before the end of 2013. If the last statement was too hawkish and Bernanke will reassure investors that ultra low yields and QE are going to stay till unemployment reaches 6.5% and inflation expectations not exceed 2.5% we can see a major upside move on EUR/USD. On the other hand if FOMC sounds a bit hawkish (similarly to the recent Minutes), it can strengthen USD and can spur some major correction on EUR/USD.

The zloty is still weak. The market is waiting for the GDP reading.

I don't expect any major movement on PLN today. Investor are already preparing for tomorrow’s GDP data. The Bloomberg survey shows that economists expect the growth around 2%. Taking into account the very weak ECO data form the last quarter it is possible that we can see reading between 1.8-1.9%. Values below 2% can push EUR/PLN above 4.2000 level. On the other hand anything over 2.% (low probability) can reduce the pressure on zloty and extend the correction toward 4.15 PLN per euro.

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

EUR/USD 1.3350-1.3450 1.3450-1.3550 1.3250-1.3350
EUR/PLN 4.1500-4.1800 4.1400-4.1800 4.1500-4.1900
USD/PLN 3.0900-3.1300 3.0700-3.1100 3.1000-3.1500
CHF/PLN 3.3400-3.3700 3.3400-3.3700 3.3500-3.3800

Technical analysis EUR/USD: staying around the yearly highs is a bullish signal. The odds for successful test of 1.3500 are quite highs. Taking into account the trend any correction move not exceeding 1.3300 should be used for opening long positions.

Wykres

Technical analysis EUR/PLN: slight correction from around 4.2000 does change nothing. Until we trade above 4.1500 all slides should be used for increasing the bullish positions. After breaking 4.2000 the next target will be 4.2300 level (50% Fibonacci retracement level).

Wykres

Technical analysis USD/PLN: the bearish trend is still defended by 3.14 level and 50 DMA. If we comeback below 3.1000 it will be strong bearish signal and target of 3.05 will be in the range. On the other hand breaking 3.1400 upside will generate the buy signal even with the target around 3.25-27.

Wykres

Technical analysis CHF/PLN: slight downside move under 3.3600 does not generate the sell singal yet. Only when the pair slides below 3.3300 shorts are preferred. The upside move is limited by 3.41.

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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