Afternoon analysis 30.11.2015:
The euro dropeed before the ECB meeting. The zloty did not exploit better than expected reading on the GDP growth. The dollar hit the new high against the Polish currency.
Investors expect the European Central Bank to increase the monetary stimulus on Thursday. The ECB President Mario Draghi is to announce new measures that will increase the probability of meeting the inflation target near 2 percent. In the last few quarters inflation was near the zero level, which increased pressure on the ECB to act.
Among the tools considered by the monetary authorities are increasing the scale of purchases or extension of the program after September 2016. Moreover, the ECB may decide to include low quality assets and municipal bonds to the program. Moreover, additional cut of the deposit rate is expected. All additional tools would be aimed to strengthen credit action.
The ECB President Mario Draghi announced additional actions in October. Since then the euro has remained under pressure. Today the common currency dropped to 1.0562 against the dollar. It was the lowest level since April. A decline below the 1.05 level would open the way to the lowest level since 2003. If the ECB provides additional measures, it may result in the short term declines of the euro.
Waiting for the Fed
The next key event in December is going to be the Federal Reserve meeting. The probability of a hike remained above 70 percent (according to Bloomberg).
Tomorrow the ISM data is scheduled. The report is important to assess the overall performance of the US industry. The forecast is little above the prior month level at 50.1. If the index moves higher, it will signal improvement in industry as the latest reports from the sector were mixed. The PMI index for the US economy will have smaller impact.
Nevertheless, the key factor that may affect expectations before the Fed meeting will be the report on employment situation on Friday. The forecast is for 200k in employment increase. Last month it increased 271k. If the tendency holds, it will support the dollar.
The GDP growth was better than expected. The economy grew 3.5 percent in the third quarter against 3.4 percent previously estimated. In contrast, the data on inflation rate missed the expectations. The inflation rate stood at minus 0.5 percent against minus 0.4 percent that was expected. The report increased pressure on the MPC to adjust interest rates as the inflation rate remains very far from the 2.5 percent target.
The zloty remained under negative pressure. The Polish currency dropped in spite of positive sentiment in the broad market. Currently, the probability of a stronger zloty is rather limited.
Вышеизложенный комментарий не является рекомендацией в понимании Постановления министра финансов от 19 октября 2005 года. Он был составлен с информационной целью и не является основанием для принятия инвестиционных решений. Ни автор работы, ни Cinkciarz.pl ООО не несут отвественность за инвестиционные решения, принятые на основании информации, которая приведена в данном комментарии. Копирование и распространение данной работы без письменного согласия Cinkciarz.pl Sp. z o.o. запрещено.
The euro dropped to the lowest level since April. The German household worried by the outlook for...
The euro hit the new lows before the key ECB meeting. The US reports support the case for tighten...
On Tuesday the risk aversion prevailed in the markets. The euro went up against the dollar after ...
The currency market is calm. Interview with Daniel Tarullo, the Fed's governor, on Bloomberg TV. ...