Daily analysis 29.11.2012

, author:

Marcin Lipka

Positive comments regarding fiscal cliff improved the market sentiment. EUR/USD erased all the losses and the S&P 500 after gain of 0.8% returned above 1400 mark.

Macro data:

  • 14.30 CET: revised GDP from the U.S
  • 14.30 CET: jobless claims in the U.S
  • 16.00 CET: pending home sales m/m in the States

Another day when data does not count. Only words matter.

Yesterday's session was completely opposite to the Tuesday's one. On Wednesday we had weaker macro data, but positive comments concerning the cliff. The sentiment moved to the “green side” after a statement form the Speaker of the House John Boehner. The Republican congressman told reporters: ““I am optimistic that we can continue to work together to avert this crisis sooner rather than later,”. Similarly we can understand Barak Obama's remarks. The President claims that the agreement should be set before the Christmas. Especially the first declaration boosted the common currency to 1.2950 level and EUR/PLN to 4.1000 mark.

Goldman Sachs sees EUR/USD at 1.4000 in 2013.

Undoubtedly it is a bold estimate. With persistent problems in the Eurozone the survey from other banks is rather pessimistic. The median reading published by Bloomberg shows that analysts predict 2013 EUR/USD level around 1.2500 what is around 450 pips lower then yesterday's close. Goldman Sachs supports its prognosis with idea that systemic risk in Europe is weakening and the investors attention will be moved to other regions with more persistent fiscal problems. It is not clear whether the bank refers to U.S. However if the Goldman's scenario fulfills we can expect that EUR/PLN can slide to 3.8000 and USD/PLN should be traded then around 2.7000 level.

Low yields on Spanish and Italian debt.

Focusing on the common currency it is worth to pay attention to the peripheries debt market. Recently we can observe that 10 years Spanish bonds are getting closer to 5% level (currently at 5.3%). Even much better look the Italian government papers with the yield not seen since 1H of 2011 (4.6%). There is an inverse correlation between the Italian or Spanish debt and EUR/USD rate (when the yield decreases EUR/USD rises). It is possible that the bonds can pull up the euro dollar pair.

PLN still depends on the equities and EUR/USD. Tomorrow crucial Polish GDP data.

The zloty should move with the direction of EUR/USD and the global equity markets. However it is worth to remember about the Friday's GDP report. The current survey shows growth around 1.8% y/y. On the markets there is also a broad view that the reading will be between 1.5% - 2.0% with expectations in the lower range. Undoubtedly the actual data below 1.6% will be negative for the Polish currency. It is possible that EUR/PLN pair can rise over 4.1200 mark. Very low reading (under 1.5% GDP growth q/q) can spur expectations of more significant rate cut (i.e. 50 bps) on the next MPC meeting what can weigh on the PLN also through the next week.

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

EUR/USD 1.2850-1.2950 1.2950-1.3050 1.2750-1.2850
EUR/PLN 4.1200-4.1000 4.1100-4.0900 4.1600-4.1200
USD/PLN 3.2100-3.1800 3.1800-3.1500 3.2500-3.2100
CHF/PLN 3.4200-3.3900 3.4000-3.3800 3.4400-3.4100

Technical analysis EUR/USD: after the strong intraday slide the pair closed above the opening levels what generates a bullish signal. From technical analysis it looks that 1.3000 mark should be successfully tested. The negative scenario for longs is the closing under 1.2900.


Technical analysis EUR/PLN: it is still higher chance for new lows then highs. Yesterday's come back to 4.1000 favors bears. The expected levels are 4.0800 and then 4.0600. Only breaking 4.1250 will generate the bullish signal.


Technical analysis USD/PLN: USD/PLN perfectly bounced back from 50 DMA and closed the day under 23.6% Fibonacci retracement level (selling USD signal). The come back to the down trend is more possible with the first target around 3.1300 and then even 3.1000 test.


Technical analysis CHF/PLN: CHF/PLN situation is not clear. Closing under 3.4000 (under 50 DMA and 23.6% Fibonacci retracement level) favors bears with the target of 3.3500.


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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