Daily analysis 02.07.2015

There will probably be no breakthrough in negotiations between Greece and its creditors until Sunday. A surprising decision of Riksbank overvalues the Swedish krona. As an exception the Payrolls are published on Thursday. The zloty remains above the limit of 4.20 per euro and the franc costs less than 4.00 PLN.

Most important macro data (CET – Central European Time). Estimations of macro data are based on Bloomberg's information, unless marked otherwise.

• 14.30: Data from the American labour market: New working places in the non-agricultural sector (estimations: 233k); increase in salaries (estimations: +2.3% y/y and +0.2% m/m), unemployment rate (estimations: 5.4%).
• 15.45: Orders in the American industry (estimations for May: minus 0.5%).

No chance for an agreement until Sunday

Yesterday's appearance of Prime Minister Tsipras buried any chance of coming to an agreement before Sunday's referendum. The Chief of the Greek government said that Troika is trying to blackmail Athens by claiming that voting against the reform forced by Brussels will result in the Grexit. Tsipras on the other hand, wants to convince the society that it will give his government a better position in the negotiations.

Representatives of the eurozone have also intensified their standpoints. According to them, Sunday's referendum will decide whether Greece will keep the common currency or not. They are not planning any discussions before knowing the results of the voting.

The GPO surveys published on Wednesday evening show that 43.3% will definitely vote for the creditors' program and 39.3% has an opposite opinion. Additionally, 74% of the respondents want to remain in the eurozone “irrespective of the price”. Due to the above survey results, the final result of the referendum is still uncertain. However, if the creditors manage to convince an adequate number of Greeks that the referendum is actually about continuing the membership in the eurozone the chance for a “yes” will increase significantly.

What is interesting, this voting is also a real test for the government. In today's interview for Bloomberg, the Greek minister of finance said that he will resign if “yes” is victorious. It is likely that the Prime Minister Tsipras will also resign even though, Yanis Varoufakis did not want to give a clear answer to this question.

Interesting decision of Riksbank

The Swedish monetary authorities have once again surprised the market by cutting the interest rates from minus 0.25% to minus 0.35%. Additionally, Riksbank extended the program of bonds' purchase until the end of 2015. The main problem for the bankers from Stockholm is the enforcing krona. According to them, it increases the risk of inflation reaching its target slower.

At today's meeting Riksbank also took notice of the uncertainty regarding Greece. It is the first of the national banks which cites the recent commotion in Greece as a reason for changes in its monetary policy. However, it seems to be the only good way for Sweden to prevent the enforcement of the krona to the euro. Considering the determination of the Swedish central bank the EUR/SEK pair should remain above 9.20.

Few words about the currency market

There should be a break in news from Greece this afternoon and the market will concentrate on the data from the American labour market. As an exception the payrolls will be published this week on Thursday. The market expects a reading in the area of 230k, an increase in salaries to the limit of 2.3% y/y and the unemployment rate on the level of 5.4%. A good reading is currently expected by the investors due to other relatively good data from the US economy. Thus, the EUR/USD will not be taken to the area of 1.10 until the publication is in the limit of 250k and there is an increase in salaries, which will at least be coherent with the consensus.

In case of a poor publication (below 200k), a downwards review of recent readings (at least 30k) and a decrease in the tempo of the increase in salaries, the USD can wear off to the EUR by even 100 pips. In general, the chance for a reading that will be better than expectations is more likely. However, a visible appreciation of the USD will not happen until the visible overrun of expectations.

The euro is stable and the franc cheaper

The national currency market is relatively stable. The euro stays below the level of 4.20. Additionally, the franc today costs less than 4 PLN. The main reason for the relative weakness of the Swiss currency is Monday's intervention of the SNB. Its goal was to decrease the CHF to the EUR. Despite there not currently being any reports about the Swiss National Bank present on the market, the investors' fear of repeating these actions can cause a smaller appetite on the franc. It is also possible that the SNB is actually intervening although it does not admit it.

However, if in Sunday's referendum the Greeks decide to deny the creditors' offer, the tension on the market will increase significantly and the franc is most likely to enforce. On the other hand, if the result gives a sign for the calming down of the situation in Greece, there is a chance that the CHF/PLN will quickly go below 3.95.

Anticipated levels of PLN according to the EUR/USD rate:

Anticipated GBP/PLN levels according to the GBP/USD rate: