Daily analysis 21.11.2012

No deal in Greece put pressure on EUR/USD (1.2750). Ben Bernanke is warning of the fiscal cliff outcome. PLN supported by better than expected industrial production reading.

Macro data:

• 14.00 CET: Core inflation (Poland)
• 14.30 CET: Jobless claims (USA)
• 14.58 CET: Pre. PMI in (USA)
• 15.55 CET: final reading University of Michigan index (USA)
• 16.00 CET: Conference Board (USA)

No deal in Greece. The next meeting is scheduled on Nov. 26th.. Bernanke is warning on fiscal cliff.

Unofficial reports were not confirmed today. The Eurogroup and IMF didn't reach the deal on Greek issues early today. The officials will have to meet again on Monday. Immediate after the news hit the wires EUR/USD dropped by 60 pips to 1.2750 level. It will be crucial how the common currency will be fearing in first hours of European trading. If it comes back above 1.2800 it will be a bullish signal. Further sliding under 1.2750 will support the bearish side. During the yesterday's Ben Bernanke speech in New York the FED chairman warned of the consequences of the fiscal cliff. He claimed that lack of agreement concerning the U.S budget will push the States into recession. Besides mobilizing politicians Bernanke also said that the current level of unemployment is 2-2.5% too high. The news was rather negative for USD, because it means that ultra dovish monetary policy will be continued to support the job market.

More clashes between IMF and the Eurogroup.

Form currently available data the clashes between IMF and the Eurogroupe cased the meeting to be scheduled again. The fund is most concerned on the debt to GDP ratio to be lower till the end of 2020 and encourage the Eurozone finance ministers to debt write down. On the other hand the ministers would like to extend the period to 2022 and oppose to any debt forgiveness (cause it could be seen as soverign financing). Besides this issues other cases seems to be close to finalizing. For the signature are waiting bond buy back, lowering the interest rate on the current debt, and giving back the profits on Greek bonds to government in Athens. According to the cited by Reuters Goldman Sachs report the mentioned above “ideas” will be able to lower the debt to GDP ratio to 120% in 2022. However, if the base scenario fails, the ratio can be higher then 120% even after 2025.

PLN stronger on better then expected macro data.

The Polish industrial production positively surprised. The reading showed a gain of 4.6% y/y whereas the market consensus was 1.5%-2.9%. Better then expected data will rather not stop the MPC members to lower the benchmark rate on the December meeting especially that the inflation pressure is weaking. The GUS data showed that PPI slide to 1% y/y in October vs market survey of 1.6% y/y. The PLN after both reports strengthened to 4.1200 level at the end of the trading day. For the zloty the first hours of the European session will be quite crucial. It will show whether the risk aversion after the lack of agreement concerning the Greek issue put pressure on the PLN.

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

Technical analysis EUR/USD: the recent slide worsened the technical situation on the common currency. If the support level around 1.2750 (38.2% Fibonacci retracement level) fails it is possible that we quickly can test the 1.2600 level (50% Fibonacci retracement level). Come back above 1.2805 (200 DMA) will be strong bullish signal.

Technical analysis EUR/PLN: the downside scenario is preferred. Breaking the support level of 23.6% Fibonacci retracement level and 50 DMA (4.1200) will give signal to further slide to 4.1000.

Technical analysis USD/PLN: the bullish signal is breaking 3.2450 (38.2% Fibonacci retracement level). Sliding under 3.1900 (50 DMA, and 23.6% Fibonacci retracement level) is bearish.

Technical analysis CHF/PLN: is currently trading near the strong support 3.4100 level (23.6% Fibonacci retracement level). If it breaks the support it will be the signal for the further downside move.