Daily analysis 11.03.2013

Better-then-expected jobs data from the U.S lifted the dollar and push the EUR/USD again toward .1.3000. The common currency was pretty resilient to the Italian downgrade and weaker macro reports from China. Goldman Sachs is bullish on EUR/USD in the long term. The zloty came back to 4.1300 level. A view on NBP inflation report.

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted:

• No major data which can significantly move the global currency markets:

Strong NFP pushed the dollar higher.

The U.S economy added 237k jobs in February. It was around 70k more then analysts' expectations. Despite the January downside revision of 28k the NFP was still impressive. It was quickly priced in equities and in the dollar value. The EUR/USD slumped around 100 pips just after the data (from 1.31 to 1.30) and the cable dived from 1.5030 to 1.4930. The common currency stopped again at the 1.3000 level, and it was not pushed lower by the Italian downgrade (From A- to BBB+) and weak Chinese data (industrial production and retail sales below the expectations; inflation above estimates). It is hard to judge now whether it is a real short term bottom. In my opinion we should get the answer in the next 2 trading sessions. If the euro dollar holds 1.3000, then we can expect a stronger rebound (even toward 1.3200). On the other hand if the psychological level fails to hold then the move toward 1.2850 is expected.

Goldman Sachs sees EUR firmer in the long term. The pound still under pressure.

In contrary to the recent market developments the well known investment bank predicts that in the long run EUR should outpace USD. Goldman Sachs strategists claim that “weak U.S. balance of payment”, Euro-Zone fiscal tightening and “deeper integration in euro-area should ultimately boost EUR”. The bank also predicts that the British pound will under-perform to the common currency. The main reason of the sterling weakness will be dovish stance by the new BoE governor, and U.K.'s current account deficit around 5% of GDP. Unfortunately Goldman Sachs does not publish any time frame and future levels of EUR/USD or EUR/GBP.

The zloty is still stable. A quick view on the NBP inflation report.

Thanks to the solid jobs data from the States, the Polish currency returned to the levels seen before the “famous” MPC rate decision (EUR/PLN: 4.1300). It confirms the theory that the condition of the global equity markets is crucial for future performance of the Polish currency. Just a while a ago the Polish Central Bank (NBP) has published most recent inflation report. It shows that the CPI in 2013 will be only 1.6% (in comparison to the November estimate of 2.5%). and the GDP growth is reduced from 1.5% to 1.3% for the current year. The positive outcome from the report is that the Polish economy is suppose to expand 2.6% in 2014 whereas previously the estimate was at 2.3%. The report seems to be bearish for the zloty especially concerning the inflation (still quite a lot of room for the cuts). In the coming hours we will see whether investors see it in the same way.

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

Expected GBP/PLN levels according to the GBP/PLN rate:

Technical analysis EUR/USD: the recent jumps on Eur/Usd has not changed the broader view. The bearish trend is still valid with the target around 1.2870-1.2840 (head and shoulder target, 50% Fibonacci retarcement level and 200 DMA). The comeback to the bullish trend is possible after moving above 1.3300 (currently low probability).

Technical analysis EUR/PLN: the slide toward 4.1300 confirms the bearishness on EUR/USD. It is worth to note, however, that if we stay the rise above 4.1500 the 50 DMA crossing 200 DMA (golden cross) can generate the buy signal and the pair can jump over 4.1900 what in result can generate a buy signal.

Technical analysis USD/PLN: the base case scenario is still a move toward 3.24-3.27 (between 200 DMA and 50% Fibonacci retracement level). The comeback to the bearish trend is possible after sliding under 3.1200 (50 DMA).

Technical analysis CHF/PLN: the pair looks pretty stable now. Trading between 3.33-3.41 is neutral for the CHF/PLN and it is also the base case scenario. Breaking up the range trend should generate the buy signal and sliding under 3.3300 should attract bears.

Technical analysis GBP/PLN: the bearish trend on GBP seems to be strong and any rebound not exceeding 4.90 (23.6% Fibonacci retracement level and 50 DMA) should be used to open new shorts. The pivot point is around 5.00. Analyzing 5-year chart we can see that the target of the recent move can be set around 4.5000.