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Daily analysis 28.05.2013

, author:

Marcin Lipka

No emotion day is behind us. Possible scenarios on the Federal Reserve action and the exit date. EUR/PLN is still not strong enough to breach 4.20 barrier. The zloty will be depended on the global sentiment today.

No emotion day is behind us. Possible scenarios on the Federal Reserve action and the exit date. EUR/PLN is still not strong enough to breach 4.20 barrier. The zloty will be depended on the global sentiment today.

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

  • 16.00 CET: Consumer confidence index from the States (survey 71 points)

Calm day on FX. FED again. Data from the States

Monday was pretty sleepy day on FX. Lack of traders form London or New York caused hardly any changes on the major pair. Today the volatility is supposed to pick up a bit especially after the U.S opens.

As I have noted quite frequently recently we have a new opening on currencies. Bernanke's testimony before the Congress and May minutes built some frames when the QE is suppose to be reduced. Currently the most probable data is mid September. The data is within the range of “few meetings” mentioned by the FED chief. In September the FOMC decision will be also followed by press conference what will allow the governor to explain in details any issues regarding the asset purchase tempering. Another argument is recently published by Bloomberg survey where primary dealers expressed concerns on recent FED communication with markets. It will be also the element which supports the September data. Another interesting case is a reduction path. Will the Fed start tempering with 5 billion or 10 billion ? Which assets are fist in the line? Probably MBS, but the answer is not clear. Any speculations on the case and future “surprises” will give the market an excuse to increase the volatility and increase the adrenaline in the trader's blood.

In the macro calendar we have only consumer confidence from the States. I don't expect any larger move (more then 50 pips) after the data.

The zloty is still pretty stable.

Polish currency was able to stay below 4.20 level. It does not negate the breakout scenario, but gives some support to EUR/PLN bears. However, in case of risk off sentiment and increase of bond yields we can expect a stronger reaction and further pressure on the zloty. It is also possible that we can move even toward 4.25 in one day due to larger capital outflow from the debt market. On the other hand the PLN has been resistance to any negative news – weak local and European economy, larger budget deficit and overall tepid outlook. The only support for the zloty is bond purchases by foreigner, but this stream can dry up quickly (regarding the future of QE) and then the pressure will mount quickly.

Today I don't expect that the zloty will move above 4.20 or fall below 4.18. Similarly to the EUR/USD another session is suppose to be pretty laid-back.

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

EUR/USD 1.2850-1.2950 1.2950-1.3050 1.2750-1.2850
EUR/PLN 4.1600-4.2000 4.1500-4.1900 4.1600-4.2000
USD/PLN 3.2200-3.2600 3.1900-3.2300 3.2500-3.2900
CHF/PLN 3.3400-3.3800 3.3400-3.3800 3.3500-3.3900

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

GBP/USD 1.5050-1.5150 1.5150-1.5250 1.4950-1.5050
GBP/PLN 4.8900-4.9300 4.9300-4.9500 4.8700-4.9100

Overall technical situation on the analyzed pairs

The technical analysis perfectly predicted EUR/USD move. There is still no changes on the analyzed paris.

Technical analysis EUR/USD: very clam trade hasn't changed the technical situation. The EUR/USD should be still under pressure and head toward 1.2800 and in extension to 1.2700. Moving over 1.3000 should initiate the rise even toward 1.3200.

Wykres

Technical analysis EUR/PLN: the base scenario is still the range trend (4.12-4.20). Alternatively the breakout above 4.20 should generate fast move toward 4.25-4.30. Only falling under 4.12 should give bears arguments to open short positions.

Wykres

Technical analysis USD/PLN: the 3.27 target is still in place with extension to 3.3300. A comeback to the sliding trend is possible after falling below 3.18 (low probability currently).

Wykres

Technical analysis CHF/PLN: we are again close to generating sell signal on CHF/PLN. Falling under 3.330 should give a sell signal with a target of 3.2700. If 3.33 resistance holds then we chould expect the CHF/PLN to stay in the range trend (3.33-3.40).

Wykres

Technical analysis GBP/PLN: the short term target for the pair is a move toward 5.0000 and an attempt to change the mid term trend to rising. The breaking above 5.0000 should initiate the move toward 5.1000. The alternative scenario is a move under 4.85 where bears should take the lead.

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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