Daily analysis 06.02.2013

EUR/USD managed to cut half of the Monday's losses thanks to strong U.S market. Politicians' statements have no impact on the common currency so far. The yen is weaker again due to earlier resignation of BOJ governor Masaaki Shirakawa. In Poland we have the interest rate decision today, and an important debt auction tomorrow.

Macro data (CET- Central European Time):

• Factory orders from Germany (survey 0.7% m/m and minus 1.2% y/y)
• Usually between 12.00 CET and 14.00 CET MPC announces the rate decision (survey 3.75%)
• 16.00 CET: Polish MPC conference

Rebound on EUR/USD. Hollande wants a stable euro, and Frieden is not concerned with the common currency rate. The end of the week will be crucial.

According to yesterday's analysis the U.S stock market was the main driver of a global rebound. EUR/USD managed to cut the Monday's losses by half and equities in the States were hovering near mulit-year highs. The only concern is a timid reaction on peripheries debt. Both Spanish and Italian yields depreciated only a few basis points. It was much less then +20 bps rally on Monday. This markets will be closely watched in the following days. On Tuesday we get some reaction regarding the currency rates from Francois Hollande. The French president said that: “the euro should not fluctuate according to the markets' mood” and “A monetary zone must have an exchange rate policy. If not it will be subjected to an exchange rate that does not reflect the real state of the economy”. The statements didn't put any pressure on the euro. We didn't see also any response from the common currency after a contrary opinion from another EU official. Luc Frieden the finance minister from Luxembourg said that according to Bloomberg that ”euro's level doesn't concern him at present and its strength follows the economic reality of the euro area”. It is possible that during the Thursday's EBC conference Mario Draghi will be asked about the EUR rate. His lack of response (lack of concern) can however, help the common currency. Another record breaking levels on EUR/JPY and USD/JPY were spurred by 3week ahead of schedule resignation of BOJ governor Masaaki Shirakawa. It boosted the market speculations that the next Central Bank chief will be extremely dovish and can even increase the value of QE or the inflation target from 2% to 3%. For the common currency the end of the week will be quite crucial. If it comes back above 1.3600 mark then we can quickly reach mulit-month highs. On the other hand if euro falls under 1.3450 then it can increase the odds for the slide to important support levels around 1.3300.

Polish MPC in focus. Tomorrow is an important debt auction.

I have recently mentioned many times that a key to medium term PLN performance is the MPC conference. Any suggestions regarding another cut at the next meeting can put pressure on PLN and push EUR/PLN pair above 4.2000 in the following days. On the other hand if central bank governor Marek Belka sounds as hawkish as during the January conference it can strengthen the zloty to 4.15 per euro. Regarding the current market situation, the December voting results and recent MPC members statements I would rather see more dovish stance and therefore expect some PLN weakness. A short term zloty strength can be expect after tomorrows debt auction. If the demand for Polish bonds is strong and Ministry of Finance decides to organize a supplementary auction than Poland will be able to secure around 50% of its borrowing needs for 2013. Such a headline can not only help the debt market but also can give some boost the the PLN.

Spodziewane przedziały par złotowych w zależności od kursu EUR/USD:

Technical analysis EUR/USD: the rebound from support level around 1.3500 is a positive signal for bulls. If it manages to come back above 1.3600 it can spur the rise to new record high levels. On the other hand if euro/usd falls under recent lows we can expect the slide to continue to 1.3350-1.3300 (levels of January consolidation and 23.6% Fibonacci retracement level).

Technical analysis EUR/PLN:yesterday's low volatility didn't change the technical situation. The come back above 4.1800 favors EUR/PLN bulls again. The target then is 4.2100 and 4.2500 in extentions. On the other hand he second attempt to breach 4.1500 downside can be successful and in consequence favors bears.

Technical analysis USD/PLN: the first resistance level is 50 DMA around 3.1150. The next resistance is 3.1400. The breakout of 3.14000 should change the trend and spur move toward 3.25-3.27. We should remember however, that the trend is still bearish and until 3.1400 is broken any level should be used for opening short positions. The medium term target is still 3.0000 and 2.9000 in extension.

Technical analysis CHF/PLN: tuesday didn't change the technical situation. Bears should be waiting until the CHF/PLN moves under 3.3300. Such a slide will initiate the sell signal with the target around recent lows (3.27). The longs are set to open buy positions above 3.41 and wait until 3.4800 is reached (50% Fibonacci retracement level).