Afternoon analysis 20.03.2015

Greece moves closer to agreement with country's creditors. The dollar pressured after dovish stance of the Federal Reserve. The zloty strengthened against the dollar, but decline against other major pairs.

The European Union summit resulted in closing positions between Greece and country's creditors. Prime minister Alexis Tsipras said the talks with key European politicians – Angela Merkel, Francois Hollande and Donald Tusk – and the European Central Bank president Mario Draghi were successful.

Greece may get next disbursement of aid as soon as next week, if the country fulfills its commitments – according to Bloomberg citing unofficial sources. The money would come form profit the ECB get on buying Greek bonds.

Prime minister Alexis Tsipras assured that his government is willing to fulfill its commitments toward country's creditors without the need to obey austerity policies imposed by Troika. The country is going to implement its own reform program that doers not include “recessionary” measures.

The breakthrough in the Greece case in very important. The country will face bankruptcy within few weeks, if is not supported by next disbursement of international aid. Athens are saying that the government has enough money to fulfill its imminent obligations.

The EUR/USD moved higher

Higher likelihood that Greece finally forges a permanent deal with its creditors builds up the euro against the dollar. This factor will increase the EUR/USD rebound after surprising decisions of the Federal Reserve.

On Thursday the US central bank – as expected – decided to drop “patience” from its statement. As a result, the Fed pave the way for interest rates hikes as soon as in June. However, the monetary authorities decided to lower forecast for interest rates in 2015 and next years. Thus, the expected period of easy monetary policy in the US has been extended (more about Fed's decision in our previous commentaries).

Recent data has been supporting for the euro. The European Central Bank informed that euro zone banks made bid for near 100 billion euro in cheap loans tender (TLTRO) aimed at supporting the real economy – a result twice higher that projected. It has been next report – after good data on private credit and credit conditions – that showed a prospect for stronger rebound in the euro zone economy.

Weaker zloty

Friday is not good for the zloty. The Polish currency dropped against all its major pair except the dollar. However, given the volatility spike after Fed's decision, the zloty has been quite stable.

A stronger risk appetite in the markets due to more dovish Fed stance and some positive developments in the euro zone coupled together create supportive environment for the zloty. Moreover, recent reports from Poland has been supportive. As a result, the zloty may continue to increase.