Afternoon analysis 17.06.2015

The currency market was calm, as investors are waiting for the Federal Open Market Committee's policy statement. The Greek uncertainty supported the Swiss franc. The zloty dropped on the weak labor market data and the risk aversion in the market.

Today's session was calm as investors were waiting for the Federal Open Market Committee's policy statement and the newest macroeconomic forecasts. Market participants are not willing to take positions before the FOMC provides a hint about whether the Fed plans to hike rates only once or more this year.

The major figure will be the dot plot with the Fed members' interest rate forecasts. In April the median projection was 0.625 percent. If the level is not altered, the market consensus is that there will be two interest rate hikes this year. The first is expected in September.

However, the latest reports gave no clear answer regarding the condition of the US economy. Only the labor market is in good shape while the other reports are mixed. As a result, it is likely that the Fed will not rush with the policy tightening. If the median forecast is lower than the previous one, the dollar may drop and risk assets might be supported.

Greece helped the franc

The nervousness concerning Greece is getting stronger. The Eurogroup meeting is scheduled on Thursday. The talks will focus on the issue of the standoff between Athens and the country's international creditors. However, comments before the meeting were very nervous.

The German Finance Minister Wolfgang Schaeuble said it is time to prepare for the Greek default, according to unofficial sources. Moreover, Athens is not going to submit any new reform proposals tomorrow. And finally, the Greek Prime Minister said he is ready to accept the responsibility for saying "no" to the international creditors if their proposal is not acceptable for the nation.

Greece has to repay a 1.6 billion euro bill to the International Monetary Fund by the end of June. Later the county is expected to repay the European Central Bank. If any of these payments are missed, the nation will go bankrupt. A negative scenario is that the next step will be Greece leaving the eurozone and even the European Union. A similar warning was issued by the Greek Central Bank in its monthly report.

The risk aversion prevailed in the market as the future of Greece is getting more vague. As a result, the frank posted gains at the beginning of the session. Later, the Swiss currency gave away some gains, but it remained relatively high.

Weaker zloty

Today's reports did not help the zloty. Wages increased 3.2 percent on a yearly basis, less than the 3.7 percent that was forecast. The employment growth stood at 1.1 percent, as expected. Tomorrow's reports on industrial production and retail sales may have a larger impact on the Polish currency.

The unfavorable atmosphere due to the Greek crisis and the uncertainty before the Fed negatively affected the zloty. The Polish currency dropped against all its major pairs. If the Fed is more dovish, this factor may limit the negative influence of the Greek standoff. An opposite scenario will result in a weaker zloty.