Daily analysis 09.07.2013

, author:

Marcin Lipka

The EUR/USD rebound is supposed to be short-lived. Mario Draghi hearing before the European Parliament didn't affect the markets. Investors are waiting for Wednesday's minutes and Ben Bernanke speech in Boston. The zloty is fairly stable just above 4.30 PLN per euro. Polish NBP projections predicts both lower growth and inflation.

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.

  • 10.30 CET: industrial production in the UK (survey 0.2% m/m and minus 1.5% y/y)
  • 17.00 CET: Joerg Asmussen speaks in London

The EUR/USD has corrected part of the last week's slide

The common currency was fairly calm during the Monday session. The market, despite weak industrial production data from Germany (minus 1% m/m vs expectations at minus 0.5%) was gradually climbing toward 1.29 levels. The move, however, currently should be interpreted as a correction after the recent slides and some sentiment improvement spurred by the solid gains on developed equities. A perception toward the EUR/USD is still bearish. It was not also changed by Mario Draghi hearing before the European Parliament. The ECB chief most of his speech committed to the SME lending issues and the banking union. Only at the beginning he spent some time describing monetary policy, but no new facts were presented regarding the recent developments.

Today there is also a slim chance that we will see some trend changing events. Investors are still trying to price in the recent ECB dovishness and solid NPF data. The London Joerg Asmussen speech will also not change much (despite he is seen as a bit hawkish; I don't expect him to challenge the new ECB policy).

Summarizing, after the yesterday's correction, we should come back toward mid 1.28 levels on the EUR/USD. Tomorrow there is a chance that we can start a short game (lower on the dollar) before the minutes and Ben Bernanke speech in Boston. The market will be listening carefully whether the Fed's chief is concerned with yield surge on US treasuries and what is his opinion regarding the jobs market.

No major change on the zloty is expected

On Monday the zloty was trading most of the day above 4.30 level per euro. Published by the NBP projections on inflation and the GDP growth didn't surprise the economists (especially that part of it was presented on the press conference after the interest rate decision). The CPI for 2013 was cut by half in comparison to the march estimates (0.8% vs 1.6%) and the GDP growth was reduced by 0.2% both for 2013 and 2014 (form 1.3% to 1.1% and from 2.6% to 2.4% respectively). The projection confirms that economists who favored quicker and steeper interest rate cuts were right (Finance Ministry, most Polish and foreign economists and dovish part of the MPC).

The zloty should be quite stable today. There are no scheduled events which can push the Polish currency under 4.28 or above 4.35 per euro. The Swiss franc is a bit lower to the zloty but it is a result of the recent rise of the EUR/CHF pair.

Expected levels of PLN according to the EUR/USD rate

Kurs EUR/USD 1.2850-1.2950 1.2950-1.3050 1.2750-1.2850
Kurs EUR/PLN 4.2800-4.3200 4.2700-4.3100 4.2900-4.3300
Kurs USD/PLN 3.3200-3.3600 3.2900-3.3300 3.3500-3.3900
Kurs CHF/PLN 3.4600-3.5000 3.4500-3.4900 3.4700-3.5100

Expected GBP/PLN levels according to the GBP/PLN rate

Kurs GBP/USD 1.4950-1.5050 1.5050-1.5150 1.4850-1.4950
Kurs GBP/PLN 4.9700-5.0100 4.9900-5.0300 4.9500-4.9900

Overall technical situation on the analyzed pairs

The EUR/USD is still bearish and should test successfully 1.2800 on the downside in the following session The CHF/PLN and EUR/PLN has generated a sell signals. The pound is also close to send the sell signal.

Technicznie EUR/USD: the EUR/USD is in the down trend and should test 1.2800 again. If the support fails then we can expect the further downward pressure toward 1.2650 (lows form November 2012). Alternative scenario is a rise over 1.3070 with a buy signal. Many technical analysts note that on the chart we can see a medium-term hean-and-shoulder formation. The neck line is around 1.28 level and if breached can indicate the target for the EUR/USD around 1.20.


Technicznie EUR/PLN: the pair fall under 4.28 what generated the sell signal with the target around 4.22. Alternatively the rise over 4.32 is again a buy signal.


Technicznie USD/PLN: the USD/PLN is still in the rising trend. After rising above 3.35 the next target is set around 3.50.


Technicznie CHF/PLN: the sell signal was generated after falling under 3.48. The taraget is now 3.42. Alternatively the rise over 3.52 should be bullish.


Technicznie GBP/PLN: the 5.10 target has been reached. The next one is around 5.20-5.22. The slide under 4.97 should favor bears.


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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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