Daily analysis 09.11.2012

, author:

Marcin Lipka

Eurogroup will not accept the next tranche of bailout money for Greece on November 12th meeting. PLN getting weaker after dovish comments from MPC and risk on sentiment.

EUR/USD around key support levels. No new news from ECB.

Thursday was rather calm on the EUR/USD. The EBC didn't change the rates (as expected), and no new info was presented during the Mario Draghi conference. He only confirmed that the slowdown in Germany is expected and Spain has to ask for help first, then ECB will use the OMT funds to stabilize the debt market.

Bloomberg: Eurogroup will not accept the next tranche of bailout money for Greece on November 12th meeting.

Late afternoon yesterday Bloomberg, citing anonymous EU official, informed that on November 12th there would be no decision concerning the next tranche of Greek bailout money. Finance Ministers of the Eurozone will be waiting for the full Troika report regarding the reforms. Interestingly the news has not moved EUR/USD. However, it is possible that when the information is confirmed there will be bearish reaction on the common currency.

Better than expected data from China.

Strong data from China hit the markets early morning. Inflation was lower then in surveys, whereas both industrial production, and retails sales beat analysts' expectations. Low inflation threat gives the Central Bank more room for maneuver regarding the monetary policy. On the other hand better economic activity data increase the odds that the worse is behind us. The reports gave rather small boost to the markets where risk off sentiment is still present.

PLN getting weaker after dovish comments from MPC and risk on sentiment.

PLN speeds up its depreciation move. We can often observe on the zloty that after the long range trade the breakout is strong and rapid. The Polish currency is under pressure from EUR/USD and slide on U.S inicies. The only element which does not harm PLN is the debt market. The yields on bonds has been slide for several months and the foreign investors involvement have been rising. However, until the sentiment improves, we will continue to see PLN weaker. I expect that in the following days to test 4.2000 mark on EUR/PLN.

Expected levels on PLN according to the EUR/USD rate:

EUR/USD 1.2750-1.2850 1.2850-1.2950 1.2650-1.2750

Technical analysis EUR/USD. EUR/USD is hovering around the support level (1.2750). The odds to go lower are still high. The move to around 1.2600 is expected (50% Fibonacci retracement level). The bearish formation of head and shoulder is going to be fulfilled.

Technical analysis EUR/PLN: EUR/PLN rapid move to the first resistance level around 4.17-4.18 is bearish for PLN. If it breaks 4.1800 (200 DMA and 38.2% Fibonacci retracement level) I expect the next move to 4.2000 and then further to 4.23 (50% Fibonacci retracement level) till the end of the next week.

Technical analysis USD/PLN: fast move to the resistance levels around 3.27-3.29 is confirmation of bullish trend. In the following week I expect the breakout of 3.2900 and move toward 3.33-3.35 (61.8% Fibonacci retracement level and highs from August and September).

Technical analysis CHF/PLN: the bullish move on CHF/PLN is expected to continue and in the following week there is a chance that we can break 3.5000 level (50% Fibonacci retracement level).

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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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