Daily analysis 03.12.2012

, author:

Marcin Lipka

Final PMI reading from China strengthened EUR/USD during the Asian session. The market has not reacted to the coming back fiscal cliff confusions. In Poland the zloty recovered some losses after disappointed GDP reading, but the Wednesday's MPC rate decision should increase the volatility.

Macro data:

  • Final PMI reading from Europe should not cause major impact on the currency market
  • 16.00 CET: manufacturing ISM from the States

PMI from China boosted EUR/USD. Fiscal Cliff on the horizon.

At the beginning of the week investors receives a present in a form of slightly revised PMI (manufacturing) from China. The correction was not large, the preliminary reading was 0.1 point lower then the final (50.5), but it confirmed the Chinese economy improvement. On the other hand worse news came form the States. Reassuring comments form the previous week were changed to broad disappointment. U.S. Treasury Secretary Timothy Geithner said that Republicans would be responsible for damage if they don't let to hike taxes on the wealthiest Americans. The voice from GOP side sounded similar with only different argument. The Republican Speaker of the House John Boehner claims that there is real threat the agreement will not be set. It was quite confusing especially that Boehner suggested a few days ago that he is optimistic regarding the fiscal issues. The EUR/USD has not moved on the comments what can suggest that recent statements were purely political. However, investors will remember that time is against the markets and if after December 15th there is no major step forward fund managers will be closely listen to every word concerning the cliff.

Weak data from Polish economy. The individual consumption lowest since 2003.

On Friday the investors were surprised by lower then expected GDP reading (actual: 1.4% y/y; survey: 1.8 y/y). The data looks even worse if we look deeper to the report. Individual consumption growth, which accounts for 62% of GDP, dropped to the lowest levels since 2003. The only real contributor to the growth was export, but it can fade quickly due to the recession environment in Europe. The PLN reaction on the data was not panic. The EUR/PLN jumped from 4.09 to 4.11 just after the report was released, but ended the day at 4.10. Fairly muted reaction does not have to mean that worse is over the the zloty. On Wednesday the MPC ends its meeting and will probably lower the benchmark rate by 25 bps. However, the Committee will try to also evaluate the recent data and can also surprise the markets with a deeper cut (50 bps) or give some hints that it will lower the rates both in January and February. This kind of statements will be weighting on the PLN medium term. For zloty it is still crucial the global sentiment and EUR/USD moves which can speed up or delay the depreciation.

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

EUR/USD 1.2950-1.3050 1.3050-1.3150 1.2850-1.2950
EUR/PLN 4.1100-4.0900 4.1000-4.0800 4.1400-4.1100
USD/PLN 3.1800-3.1500 3.1500-3.1200 3.2300-3.1800
CHF/PLN 3.4000-3.3800 3.3900-3.3700 3.4200-3.4000

Technical analysis EUR/USD: the technical situation has not changed. The up trend is still in favor with the target around 1.3150-80. Only the slide under 1.2900 (23.6% Fibonacci retracement level, and 50 DMA) changes the trend.


Technical analysis EUR/PLN: Friday's come back above 4.1000 is only a slight bullish signal. Only the break out 4.1200-4.12500 (23.6% Fibonacci retracement level, and 50 DMA) gives a strong buy signal. Closing today under 4.1000 gives more chances to the down trend come back.


Technical analysis USD/PLN: from technical point of view there is no threat for the down side trend. The first target is still around 3.1300 and second around 3.1000. Only the move above 3.1950 (23.6% Fibonacci retracement level and 50 DMA) will change the perspective to bullish.


Technical analysis CHF/PLN: CHF/PLN is not able to generate the stronger upside move. Only closing the day above 3.4150 will generate the buy signal. Under this level the selling side dominates with the targets around .3.3700 and 3.3300.


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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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