Daily analysis 18.06.2013

EUR/USD with low volatility is still holding above 1.33. We are still in “waiting-mode” before the Wednesday FED meeting results. Today's macro data can also be pretty important. The zloty is fairly stable. Polish dovish MPC members still support the July cut.

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

• 11.00 CET: ZEW from Germany (survey 38.1)
• 14.30 CET: CPI from the States (survey: 0.2%; excluding food&energy: 0.2%)
• 14.30 CET: Housing starts and building permits (survey: 950k and 975k respectively)

ZEW from Germany, CPI from the States. The Fed is still in focus.

Monday was rather non-event day. The EUR/USD volatility was really low and most of the day we were moving around 1.3340-1.3350. Today in the morning we had a slight euro depreciation after Mario Draghi comments that “ECB has “open mind” on Non-Standard Monetary Policy” The market, however, has recently been quite resilient to such statements. The probability that ECB will introduce some non-standard-measures (for example negative deposit rate) is pretty slim, especially that Draghi still predicts the economic rebound in the 2h of the year. I would rather interpret such comments as a verbal intervention to slow the euro appreciation.

Despite that everybody is waiting for the Fed, it is also worth to note today's ZEW reading. The index is positively correlated with PMI and the IFO, so any upside surprise can boost the expectations for two other measures (especially PMI which is close to the 50 mark and the reading above 50.3 on Thursday would mean the highest value in 1.5 year). Investors should also be focused on CPI data form the States. Any readings below the expectations can push the dollar lower and therefore extend the EUR/USD bullish trend.

Summarizing it is worth to observe the market data today to evaluate the sentiment before Fed decisions. It is possible that in case of better-then-expected ZEW reading we can move above 1.3400 mark.

Calm zloty. One more rate cut is expected.

Yesterday, in line with expectations, we had quite calm day on the zloty. Today I also don't expect any major moves to happen. The zloty should be also less depended on macro data both from Germany and the U.S. The PLN investors (in line with bond traders) will be much more focused on FOMC meeting results.

Taking into the account the recent statements form the Polish dovish MPC members (professor Bratkowski, professor Zeilinska-Glebocka, prfessor Chojna-Duch) they still support a rate cut (probably by 25 bps) in July. Additionally they all seem to “go along” with the expectations that it will be the last rate decrease. Now we are waiting for any comments form professor Hausner (the neutral member). If he also supports the cut then we can expect that the benchmark will be lowered in July by 25 bps.

Summarizing we can see a bit more volatility then yesterday, but I don't expect that we move beyond 4.22-4.26 range. The PLN market will still be waiting for the Fed decisions.

Expected levels of PLN according to the EUR/USD rate

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

Overall technical situation on the analyzed pairs.

We are still bullish on the EUR/USD. The USD/PLN continues its sliding trend and EUR/PLN generated the sell signal.

Technicznie EUR/USD: the rise above 1.3300 is another bullish signal (will be even stronger if we close the week above that level). In the short-term there is a chance that we will be testing 1.35 and in the medium-term even 1.37.

Technicznie EUR/PLN: the fall under 4.22 ends the rising trend and suggesting to close the long positions. The slide under 4.20 should generate the sell signal with the target around 4.12. Alternatively the rise over 4.28 will be bullish

Technicznie USD/PLN: the pair reached quickly its bearish target – 3.15. The slide under 3.15 should generate more selling pressure and a fall toward 3.08-3.1. Alternatively the rise over 3.22 will be a bullish signal.

Technicznie CHF/PLN: the franc is also close to generate the sell signal (a fall under 3.40 ends its bullish trend)

Technicznie GBP/PLN:also on the pound we are close to generate the sell signal (under 4.95). Falling under 4.95 generates the first target at 4.90. Rising over 5.02 should be bullish for the pair.