Daily analysis 17.01.2013

EUR/USD is trading near its yesterday's close. The currency market didn't move on better then expected Q4 reports form U.S banks and slightly optimistic Beige Book findings. Tomorrow during the Asian session we get crucial data from Chinese GDP and industrial production. In Poland the Eco calendar is empty today, but market will be positioning before Friday's industrial production.

Macro data (CET- Central European Time):

• 14.30 CET: Building permits (survey 905K)
• 14.30 CET: Housing starts (survey 890K)
• 14.30 CET: Weekly jobless claims (survey 365K)
• 16.00 CET: Philadelphia FED (survey 6.0)
• 03.00 CET: (January 18th ) GDP from China Q4 (survey 7.8% y/y)
• 03.00 CET: (January 18th) retail sales from China (survey 14.9%)

FED and Q4 results didn't set the direction on the common currency. Discussions regarding Juncker's comments regarding euro value has been continued.

Wednesday's data from U.S banks didn't have any impact on the currencies. The Beige Book also didn't give any clear direction either for bears or for bulls, despite it sounded a bit more optimistic. Federal Reserve does see an improvement in the real estate sector and in consumer spending. The FED is still concerned regarding the unemployment. The lack of EUR/USD slide after the report is a bullish sign for EUR (it has not dropped even though Beige Book was slightly more bullish for the dollar – better economy means less easing in the future) what can result that euro dollar correction move is close to over. The ongoing discussion concerning Juncker's “euro value” remarks in heading to ECB. Yesterday Ewald Nowotny, ECB governor said that euro exchange rate is “not a major concern” now confirming Mario Draghi stance. Similar opinion presents BNP Paribas cited by Wall Street Journal. The bank claims that “its own fair-value call for the euro is 1.3200”. We can get the same result analyzing a 10 year chart with a simple 100 DMA. The graphic shows that we are just a shine below the value of 100 DMA. Tomorrow the investors will focus on the Chinese data (during the Asian session). Better then expected GDP reading and retail sales should support the common currency and other risk assets. The weak data (especially GDP) can put euro dollar under pressure.

EUR/PLN fights with the resistance.

The PLN has been trying to close above 4.1200 level. The key to the zloty value can be tomorrow's data on industrial production. Looking at the long term chart (at the end of the analysis) the readings around survey (minus 6.5-6.9% y/y) will be the worst since 2009. The PLN should strengthen when the report shows slower slide then in September 2012 (minus 5.9%). On the other hand values around minus 10% will be bearish signal for PLN (increase the probability for the faster rate cut) and result in closing the EUR/PLN above 4.1200. Yesterday a quite interesting interview with Polish MPC member professor Andrzej Kazimierczak aired Polish religious TV Trwam. The hawkish governor (one of three who opposed the rate cut in November) didn't rule out the rate cuts, but clearly pointed that the PLN has not been weakening even though the MPC is cutting rates. One could have anticipated form the interview that stable PLN is the main concern for the restrictive members (key last 30 seconds of the interview http://www.tv-trwam.pl/index.php?section=ppw).

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

Technical analysis EUR/USD: staying around 1.3300 is not neutral for EUR/USD. If we get above 1.3350 it will be a strong signal for the bullish market comeback (even successful test of 1.3450). On the other hand breaking 1.3200 downside can result in slide toward 1.3000 mark.

Technical analysis EUR/PLN: if it closes above 4.1200 it will be strong bullish signal toward the next resistance level (200 DMA and 38.2 Fibonacci retracement level). The comeback below 4.1000 will allow EUR/PLN to trade again in the range (4.06-4.12).

Technical analysis USD/PLN: the bearish trend is still expected to continue with first target around .3.05 and second 3.00. The shorts should be closed when we move above 3.1400.

Technical analysis CHF/PLN: the bearish move is suppose to last. The target for that move is around 3.2000. The comeback above 3.3600 (low probability) should result in closing the shorts.