Daily analysis 16.04.2015

Neutral EBC summit. More weaker data from the USA. Chances for understanding with Greece increase, after the comments from Germany and Slovakia ministers of finance. Chairman Belka without any specific suggestions concerning the zloty.

Most important macro data (CET). Estimations of macro data ara based on Bloomberg's information, unless marked otherwise.

• 14.30 CET: Initiation of investments in the American real estates sector (estimations: 1.04 million).
• 14.30 CET: Permission for construction work in the USA (1.080 million).
• 14.30 CET: Applications for unemployment benefits from the USA (estimations: 280 thousand).
• 16.00 CET: Index of business condition for the Philadelphia region (estimations: 5 points).

EBC summit and data from the USA

As expected, the EBC summit did not create any clear market signals. Mario Draghi has shown a relatively optimistic approach towards the future condition of the eurozone. A statement about the danger of the economy's slower development has disappeared, and the chairman of European monetary authorities was satisfied with the fact, that other economic centres in the world share this opinion (he referred to the better prognoses from IMF).

However, when it comes to the monetary policy, it is definitely too soon to talk about the possibility of finishing the Quantitative Easing, which basically started one month ago. As usually, Draghi encouraged to make structural reforms of the eurozone, without which a cyclic revival will not translate into a structural improvement of its condition.

Interesting facts – it is worth noticing, that EBC spent already 110 billion euro, in order to finance the Greek banks. A collateral of these liquidity operations, are mainly Greece's treasury bonds. Thus, one might assume that if Greece goes bankrupt, those treasury bonds will actually be worthless. Because of this, a negative scenario for Athens, is also a serious risk of losses for the EBC.

On the other side of the ocean, we had one more reading, which was disappointing. Industrial production has dropped by 0.6% m/m, whilst the analysts' expectations amounted minus 0.3% m/m. This, along with the weak data from the labour market or the retail sales market, shows that coming out from the Winter slowdown can take longer than expected. As a result, the chances for raising interest rates before September are small. It should lay weight on the American currency in the short term.

Greek change of sentiments

We had another change of sentiments concerning Greece over the past few hours. Germany's minister of finance said, that “nobody expects a solution for the Greek matter”, before the upcoming eurogroup summit. It is planned for April 24th. Slovakian minister of finance expressed a similar opinion. It is strange, because only last week the representatives of the eurogroup showed a relatively optimistic approach towards this matter.

In Greece itself, on the other hand, the suggestions about early elections have begun to appear. There are also ideas for a referendum, which should decide whether the reforms will be accepted or not. Both of these solutions are not positive, and they increase the risk of a negative scenario. The market should be really cautious about the information concerning Greece throughout the forthcoming days.

Few words about the foreign market

The situation concerning Greece has pushed aside the reading of industrial production, which was negative for the American currency. Despite this, the EUR/USD stays within the limits of 1.0700. This means that the investors are constantly unconvinced by the negative solution of the Athens matter. On the other hand, if Greece would make progress in their negotiations with Troika, the chances for a further increase of the main currency pair, will be significantly higher.

Marek Belka's press conference

The whole press conference of chairman Belka, was actually based on an attempt to gain answers to the question, is the recent zloty's enforcement a disturbing matter. If yes, does it require any intervention from the monetary policy, or directly on the market?

The journalists of particular press agencies did not succeed in achieving any specific information. We can however get a clear message that at the moment MPC is neither surprised about the weaker euro, nor is it willing to undertake any specific action. Thus, it is still a positive scenario for the zloty, because the space for further appreciation is maintaining, and the only thing that can probably force the chairman to do something is going into the area of 3.80.

In the short term, however, there has appeared a factor, which can block PLN appreciation. Apart from the tense situation in Greece, the forint wore off quite clearly. It was probably caused with a positive opinion of the central bank, concerning the conversion of currency consumption credits. It may generate a demand for currencies from the commercial banks. This fact also puts further the exit of EUR/PLN below 4.00, and increases a chance for making a correction, even to the area of 4.05.

Anticipated levels of PLN according to the EUR/USD rate

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