Afternoon analysis 24.04.2015

, author:

Piotr Lonczak

The zloty dropped against all its major pairs. The EUR/USD hovered near the level of its previous close. The major currency pair was not affected by the eurogroup meeting outcome and weak reports from the US.

The eurogroup meeting in Riga not yielded any decision on the Greek aid program issue. As a result, the impact of this fact was meaningless for the broad market as a similar outcome was expected by investors.

However, the comments after the talks were rather rough. Some policymakers negatively assessed the attitude of the Greek finance minister Yanis Varoufakis who was acting in a way that does not take into account the seriousness of the situation. Nevertheless, the chief of Greek finance ministry said that both sides narrowed differences in their positions.

The eurogroup chairman Jeroen Dijsselbloem excluded an idea that Greece will receive aid disbursements in parts as a way to give both sides more time for negotiations. The European politician are aware that the Greek government will exploit any circumstances to postpone the final agreement as a way to soften the eurogroup stance. Thus, this idea was dismissed.

The European Central Bank president Mario Draghi warned Greece that the monetary authorities may revamp the emergency liquidity assistance conditions. His statement increased the pressure on the government to carry on negotiations. Earlier this week, the information agencies said that the ECB is planing to limit liquidity for the Greek banks.

Weak figures from the US

The data on durable goods orders – a measure of the US companies investment activity – disappointed again.

Although the orders for all goods increased 4 percent – a reading above the forecast – the data excluding transportation equipment dropped 0.2 percent in March. It was the seventh drop in a row. This factor may negatively affect the GDP growth in the first quarter. Earlier the data concerning industrial production and consumption also missed the expectations.

Given the recent weakness of the US economy, the Federal Reserve meeting next week will be very important as the monetary authorities will assess whether the weakness in the data is a signal to postpone interest rate hikes or it will be ignored.

The EUR/USD ended the session near its previous close. The anxiety concerning Greece was mitigated by a somewhat positive comments after the meeting between the Greek prime minister Alexis Tsipras and the German chancellor Angela Merkel. In turn, the dollar was negatively affected by weak data.

Weaker zloty

On Friday the zloty dropped against all its major pairs. Although the eurogroup meeting not affected the broad market in significant way, there was some risk aversion illustrated by performance of the European indexes which gave away earlier gains.

The unemployment rate dropped in March to 11.7 percent from 12 percent in the previous month. The data was in line with expectations – thus it didn't affect the Polish currency.

Currently we observe some correction in the zloty market after solid gains in the recent time. However, if the broad market sentiment improves, the Polish currency will resume appreciation.

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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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