Daily analysis 08.10.2012

Despite better than estimated data from the U.S job market stocks disappointed investors.

Better then expected data from the U.S job market was not able to held the good mood on the markets till the end of the American session. Upcoming earning season and closeness to the 5 year highs on the NYSE caused some profit taking. It was also the reason that EUR depreciated against USD after making its high around 1.3070 and ending the day in the level of 1.3030. The beginning of the European trading is slightly pessimistic due to returning discussion concerning the Spanish bailout. If Spain asks for help it is suppose to help the markets (debt and currency) especially when the austerity conditions will not be strict. During today's session I will not rather expect high volatility. The EUR/USD suppose to be stable and PLN should slightly appreciate. There is also slim chance that Eurogroup meeting will give some direction to the markets. Greece probably will get the next tranche of the bailout money as late as possible (suppose at the beginning of November).

The lower opening in Europe does not affect PLN yet. For one EUR investors pay 4.0700 PLN and one USD costs 3.1350 PLN. The relative strength of Polish zloty we could also observed on Friday. It was highly correlated with new lows polish 10 years government papers (yield at 4.644%). If the global sentiment does not worsen much, we can expect another wave of the capital flowing to the Polish debt market what can see further appreciation of PLN.

Expected levels depending on EUR/USD value:

Technical EUR/USD: technical situation has not changed much. On Friday we did see a falling star on the daily chart but it was not a strong signal unless we break 1.2900 where there is 23.6% Fibonacci retracement level and the uptrend line. The strong bullish signal will be successful test of Friday's highs of 1.3070. Then the tops of recent months around 1.3200 will be in the range of next days.

Technical EUR/PLN: the chart clearly shows willingness of testing the yearly lows of 4.0300. Concerning the strong trend it can be possible even this week. However if it fails there is a strong resistance level around 4.1000 figure. Both 50 days MA and downtrend line should stop further appreciation EUR against PLN.

Technical USD/PLN: PLN is still not able to test the 3.0800. It was pretty close on Friday but the rebound was rapid. In the coming week there is the highest chance that USD/PLN will be in the range between 3.1000-3.1500. If we successfully test 3.1800 level it will suggest the further depreciation of PLN up to 3.2400-3.2600 range. Under 3.1800 investors should consider selling each rally.