Daily analysis 29.05.2015

, author:

Marcin Lipka

The matter of Greece is becoming slightly blurry, and the market is beginning to concentrate more on the data from the USA, and the potential results of the Fed's summit in June. The zloty remains weak, although the components of the national GDP indicate that the condition of the Polish economy is good.

Most important macro data (CET). Estimations of macro data are based on Bloomberg's information, unless marked otherwise.

  • 14.30: Update of the American GDP reading for the first quarter (estimations: minus 0.9% q/q annualized, seasonally equalized)
  • 15.45: The Chicago PMI index (estimations: 53 points)
  • 16.00: The final reading of the University of Michigan consumers' trust index (estimations: 89.5 points)
  • Monday at 9.00: The PMI reading for Poland (estimations: 53.4 points)

Is Greece retreating into the background?

The matter of Greece is becoming slightly blurry. It is partly because of the comments from the European Central Bank (EBC) representatives. The EBC vice-chairman Vitor Constancio claimed, that there is no automatic connection between insolvency of the Greek nation, and insolvency of the Greek banks.

It is quite a clear suggestion that even if Athens will stop settling its debts to the IMF, the EBC will not instantly withhold the liquidity for the Greek financial institutions. It actually extends a deadline for Greece until the end of June. This is when the current aid program officially ends.

The end of June has also become a crucial term in the statements of the Greek authorities. The minister of finance Varoufakis, claimed that it is an extreme date, although the solution may come any day.

The creditors share such a viewpoint. The French minister of finance Michel Sapin, claimed that it is possible to reach an agreement in the forthcoming days or weeks. The wide range of dates also indicates the end of June as a crucial moment.

Does this mean that the forthcoming days will be calm? Not necessarily. It all depends on whether Greece will find the money to pay the upcoming debts. If not, the market will concentrate on the EBC's decision, which will be crucial for the liquidity of the Greek banks. However, considering the previously quoted statements of Constancio, the risk of Greece's exit from the eurozone, has visibly decreased.

Data from the USA and the Fed on the foreground

It is possible that the market will mostly concentrate on the upcoming data from the USA, and the Fed's summit in June. Apart from today's review of the GDP reading for the first quarter (the expected publication is in the limits of minus 1% q/q), one should also pay attention to Monday's ISM, and next week's data from the labour market.

The upcoming data will be used by the Federal Reserve to build the macroeconomic prognoses for the rest of the year. They also should influence the interest rates' increase prognosis in the forthcoming quarters. According to San Francisco's Fed chairman John Williams, the average economic increase in 2015 is currently likely to amount to approximately 2%.

It is almost one percent less than expected at the beginning of the year, and half a percent below the estimations from March. However there is a question – in what way will this matter lower the future value of money according to particular Fed's representatives? This is crucial information for the American currency.

Few words about the foreign market

Postponing the crucial term for Greece from 5th of June to the end of that month, should result in this matter having a smaller impact on the market in the forthcoming days. The news from the American economy and the anticipated changes on the summit of the Federal Reserve in June, should concentrate significantly more attention.

The zloty is weak, but it has potential

The national currency is still weak. The matter of Greece is still having a negative impact, despite the fact that it should slightly lose its significance because of the upcoming macro data from the USA. Thus, if the reading from the other side of the ocean will be exceptionally good, and they will not accelerate the perspective of increasing the interest rates, the zloty should take advantage of the situation's calm down.

The macro data will probably also be helping the national currency. Today's review of the GDP from Poland has not only raised the main reading by 0.1% (up to 3.6% y/y), but also showed its “healthy” component with a strong investment increase, and a clear positive contribution of the export. If Monday's PMI will remain close to the level from the previous month (54 points), the zloty can abandon the elections anxieties, and the EUR/PLN pair will go to the area of 4.10 at the beginning of next week.

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

Range EUR/USD 1.0850-1.0950 1.0750-1.0850 1.0950-1.1050
Range EUR/PLN 4.1000-4.1400 4.1000-4.1400 4.1000-4.1400
Range USD/PLN 3.7600-3.8000 3.8000-3.8400 3.7200-3.7600
Range CHF/PLN 3.9800-4.0200 3.9800-4.0200 3.9800-4.0200

Anticipated levels of GBP/PLN according to the GBP/USD rate:

Range GBP/USD 1.5350-1.5450 1.5250-1.5350 1.5450-1.5550
Range GBP/PLN 5.7400-5.7800 5.7000-5.7400 5.7800-5.8200

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 Sp. z o.o is prohibited.

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