Afternoon analysis 26.06.2015

Investors are waiting for the final solution for Greece. The euro was surprisingly stable ahead of the key meeting on Saturday. The zloty was as calm as the common currency. The Swiss franc returned to previous gains.

Once again, the final decision on Greece has been postponed. The base case scenario is aimed to avoid a default of Greece.

However, the latest comments were restrained. The German minister of finance Wolfgang Schaeuble criticized the stance of Greece. And the Eurogroup Chairman Jeroen Dijsselbloem also played down the optimism. On the other hand, the Greek politicians remained defiant. The Greek Finance Minister Yanis Varoufakis said his country will reject any unprofitable deal.

Today, the Greek Prime Minister Alexis Tsipras met with the German Chancellor Angela Merkel and the French President Francois Hollande. After the talks, there was information that the differences were narrowed. But later, the Greek government chief said that he rejects the ultimatum made by the country's creditors. His statement deteriorated the market sentiment.

In the meantime, the news agencies reported that creditors are going to make a new offer that will include an extension of the bailout program. Athens would get 15.5 billion euro if the offer is accepted. As a result, Greece would be able to make a 1.6 billion euro payment to the International Monetary Fund due 30 June.

On the other hand, the negative scenario is that both sides will not reach a deal. If this is the case, the Eurogroup will discuss measures to avoid the contagion effect.

Before the weekend the EUR/USD was very stable. Given the unpredictability of the situation, investors are reluctant to make any significant decisions. As a result, the volatility will increase on Monday. However, there was some movement after Tsipras’ statement.

Credit increased

Today, the European Central Bank released important data. The Frankfurt-based institution said that the private credit growth stood at 0.5 percent on a yearly basis. A result above the forecast. The credit was flat in the previous month.

The beginning of 2015 brought a breakthrough in the private credit. For the first time in three years it stopped declining. And now, the pace of credit growth is rising. It was caused by the ECB action undertaken recently - the zero rate policy, the cheap loans program and the asset purchases program (including the government bonds market).

As a result, the ECB President Mario Draghi accomplished one of his goals to mitigate risk aversion. The companies and households are borrowing, which is a sign of their improving expectations. The situation may result in a faster inflation rebound than expected. The adjustment of market expectations would affect the bond market.

The zloty like the euro

The Polish currency - as the euro - is waiting for the Greek solution. The Friday session was very calm. In the second part of the session the zloty dropped slightly. However, one has to wait until next week for more significant moves. Only the Swiss franc was more volatile. The CHF/PLN increased briefly above the 4 zloty level.

Until the end of the Greek crisis, the probability of a stronger zloty increase is limited. Until the Greek uncertainty prevails, the zloty will remain under pressure. Moreover, if there is no progress during the weekend, the zloty may extend losses.