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Daily analysis 20.09.2013

20 Sept 2013 12:02|Marcin Lipka

We are still above 1.35 on the EUR/USD. Did Yellen push the FOMC not to taper in September? German election should have no impact on the markets. The Polish zloty gave up almost all gains and came back to around 4.22 per the euro. No major news from MPC minutes.

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

  • No major data which could affect the analyzed markets

The day after. Yellen was a key player on Wednesday? German election

The EUR/USD is still strongly affected by the Fed's decision to keep the $85 billion QE for longer. Despite a relative good economic data from the US (solid existing home sales, low jobless claims (but sill deviated by some computer issues in two stays) and strong Philly Fed leading indicator) the dollar was not able, even slightly, to gain the value to the euro.

There are still many opinions on the recent Ben Bernanke and his colleagues decision. Analysts cite several reasons why the Fed kept the QE in a full amount. Most of them come from the statement or the conference – doubts on the growth, concerns on rising yields, low inflation or fiscal issues [another fiscal cliff?!]. On market there are also rumors that Janet Yellen pushed Bernanke not to taper. A kind of confirmation of that hypothesis we can get from the “WSJ” Jeffrey Sparshott interview with the former Fed's governor (1996-2002) Laurence Meyer. He describes Yellen as a strong supporter of easy money policy in an environment of elevated unemployment. The former FOMC member claims that she is able to convince the neutral part of the Committee or even the chairman to her views “Janet…persuaded the center of the committee and Bernanke to move toward a much more aggressive policy,” he said. “You could say did she move to the middle, or did the middle move to her?” (full interview http://blogs.wsj.com/economics/2013/09/19/meyer-yellen-likely-to-continue-aggressive-monetary-policy/). If that was the case during the last meeting (quite possible due to at least two reasons: firstly a crucial decision was planned to be made, so the stake was high (worth a battle), and she is very close to being nominated, so has a kind of strong mandate to push even the chairman toward her ideas (this can also explain Bernanke's withdrawal from previous suggestions)) it can mean that the market should get ready for much more dovish Fed and therefore the consequences for the dollar either in the medium or long term look pretty grim.

The German election will be probably a non-event for the market. The CDU/CSU lead by Angela Merkel still takes around 40% votes, whereas the SPD is suppose to get around 25-27%. And even if the current coalition partner (FDP) fails to get the 5% threshold the Christian Democratic Union can form a “Grand Coalition” CDU/CSU/FDP (ruled previously), but it should not be any threat to the euro area or the peripheries countries. Therefore the result of German election will not be visible in the EUR/USD rate.

Summarizing the EUR/USD is still quite strong and there are no sings that it will change quickly – the dollar is under pressure and the euro seems to be pretty stable on improving economy and less fears regarding the peripheries. Today it is also worth to pay attention to statements from 4 FOMC members (only within one and half hour; more info in the Wednesday's analysis). In the follwing week we will came back mostly to the macro data reports with euro zone flash PMIs on Monday and the IFO on Tuesday.

The weaker zloty

Yesterday afternoon the zloty weakened toward 4.20 per the euro. Today the move has been continued with the rise of EUR/PLN pair to around 4.22. It was rather unexpected especially that the EUR/USD is pretty stable. There are also no sings of the Polish bonds weakness, so I would see it as a short-term move with a much higher probability that we come back under 4.20 (especially with the EUR/USD above 1.35) than reaching new highs above 4.25.

In the published on Thursday Polish MPC minutes there are no major news. The Committee claims that the interest rates will stay at current level till the end of the year, and “further ahead the level of interest rates would depend on the scale and structure of recovery and the resulting inflationary pressure”.

Summarizing the zloty weakened significantly in the recent hours (almost giving away all Fed's gains). It is possible, however, that we can return under 4.20, especially if the EUR/USD hold to its gains and the incoming data from Europe meets the expectations.

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

Range EUR/USD 1.3450-1.3550 1.3550-1.3650 1.3350-1.3450
Range EUR/PLN 4.1800-4.2200 4.1800-4.2200 4.1800-4.2200
Range USD/PLN 3.1000-3.1400 3.0700-3.1100 3.1600-3.2000
Range CHF/PLN 3.3900-3.4300 3.3900-3.4300 3.3900-3.4300


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


Kurs GBP/USD 1.5950-1.6050 1.6050-1.6150 1.5850-1.5950
Kurs GBP/PLN 4.9300-4.9700 4.9500-4.9900 4.9100-4.9500


A breakout above 1.3400 was another bullish signal for the EUR/USD and a confirmation for the move toward the next major target at 1.3650. All PLN pairs are in bearish trends.


Technical analysis EUR/USD: the next target for the EUR/USD is 1.3650 and in the extension even 1.4000. Sliding below 1.3400 generates a sell signal with the first target around 1.3200.


Technical analysis EUR/PLN: the 4.1800 target was reached. The next is fall toward 4.10-4.13 range with a possible test of the lower band. A bullish signal is generated after moving above 4.22 level.

Wykres 1

Technical analysis USD/PLN: the target is still 3.05 on the pair (which was almost reached). We are down more than 0.15 PLN since the sell signal was generated. Shorts are preferred until we rise above 3.15.

Wykres 2

Technical analysis CHF/PLN: the comeback under 3.43 negates the buy signal. Now the base case scenario is a range trade between 3.40-3.45. Sliding under 3.40 generates a sell signal with target at 3.33.

Wykres 3

Technical analysis GBP/PLN: the sell signal was generated with the first target at 4.93 and another at 4.85. The comeback to the bullish trend is generated above 5.03.

Wykres 4

20 Sept 2013 12:02|Marcin Lipka

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

19 Sept 2013 15:03

Daily analysis 19.09.2013

18 Sept 2013 11:42

Daily analysis 18.09.2013

17 Sept 2013 11:54

Daily analysis 17.09.2013

16 Sept 2013 15:10

Daily analysis 16.09.2013

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