Daily analysis 16.02.2015

Japan emerged from recession. The Greek market pressured ahead of debt negotiations. No trade in the US resulted in lower volatility. Ukraine impact was limited.

Greece returns today to negotiation table with country’s creditors as no agreement has been reached last Wednesday. On Saturday prime minister Alexis Tsipras said that he is “full of confidence” the final agreement will be reached, although the talks will be hard. However, the optimism is smaller in Berlin – finance minister Wolfgang Schaeuble said he is “skeptical” before the meeting.

Today's negotiations – similarly as Wednesday's – were said to be last chance talks. However, this is an exaggeration – both the European Union and Greece are looking for a compromise that would end further dragging of this issue. Some concessions from both sides is needed to reach a final agreement.

If there is no agreement today, the next meeting will be scheduled. Current bailout program expires February 28. Thus, almost tow weeks are left for searching a solution that would please both sides.

Monday's session is characterized by expectancy atmosphere, but there is no nervousness apparent. The euro hovered above 1.14 dollar. The European stock markets were little changed. Low volatility is due the lack of US investors as the President Day is celebrated.

More volatility was present in the Greek financial market. Stock market in Athens dropped about 4 percent and bonds fell. This reflects, that today's meeting in Brussels is a local risk factor.

Japan emerged from recession

In fourth quarter of 2014 the Japanese economy emerged from recession. However, the nation GDP growth stood at 2.2 percent annualized – less than 3.7 percent expected. Moreover, data from previous quarter was revised down to minus 2.3 percent from minus 1.9 percent. The other data on industrial production also missed expectations.

Nevertheless, the bottom line is Japan leaving inflation behind. As a result, the stock market moved higher and hit fresh eight year highs. The yen was stable after two days of gains in the end of last week.

Stable zloty

The Minsk agreement durability tests have started. The impact of Ukrainian crisis on markets is currently limited, but there are information that fighting mounted near Debalcewe – a city held by Ukrainian troops that is circled by pro-Russian separatists, that may lift up risk aversion. Rebels claim that the Minsk agreement is not pertaining Debalcewe.

If fighting in Ukraine intensifies, the zloty will be affected negatively, as the Ukrainian crisis is a major risk factor in the CEE region, but this was still not the case. The euro should remain below 4.20 zloty and the frank under 4 zloty.