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Daily analysis 22.11.2013

22 Nov 2013 11:16|Marcin Lipka

Draghi tones down the last rumours about decreasing the deposit standard below zero. „Primary dealers” survey points on March 2014 as tapering's beginning. Ifo's record readings confirm the revival in Germany. Zloty is getting more and more bravely under the boarder of 4.20 per euro. The production data are according to the expectations. HSBC speaks very optimistic about Poland.

Most important macro data (CET). Estimation of macro data are based on Bloomberg's information, unless stated otherwise.

  • Published at 10.00 CET Ifo's index from Germany.

Draghi. Dealers. Ifo

The unussualy weak readings of French PMI from yesterday caused that EUR/USD tested the 1.3400 level. Afterwards it was only getting better – Draghi's statements and growth session in USA caused that most of the loss remained and as for today morning we are agin in the areas of 1.3500.

At the beginning of Thursday's trade in Europe the moods for main currency pair were minor. Rumours about the possible reduction of percentage standard below zero by EBC and unussualy weak PMI from France were not giving many hopes for growth at the end of the day. Currency market likes to surprise though and it also had that time. The first positive element was the German PMI reading and Mario Draghi's statment bacame the crucial moment. Apart for clear answer to the last Germany's charges about EBC destroying our western neighbours savings, the European Central Bank president refered to last rumours aboud decreasing the percentage standards below zero. He stated („The Wall Street Journal” informations), that „the discussion about it was held at the last Bank's summit, but no new informations appeared since then”. EBC president also said that the last percentage standards cut is „a safety margin” to stop the inflation falling in the direction of zero. Cutting (at least for a moment) the speculations about the further move on percentage standards caused that equal currency caught up with most of the losses, and ending the session in USA increased the appetite for risk which translated into EUR/USD ending the day close to daily heights (1.3480).

Yesteday's issue of New York's Fed published a survey of prime dealers (the biggest banks making direct transactions with Federal Reserve) about their expectations concerning the monetary politics (http://www.newyorkfed.org/markets/survey/2013/October_result.pdf ). Survey is made before every Fed's meeting, so it doesn't embrace the decision itself or the latest data form the work market. Its results are credible all the time though, because they are the main participants of the financial market and their opinions are countable for FOMC members. According to the basic examination the probable date of QE release is March 2014, and the total ending of this operation is planned on October 2014. The chance of „reinforcing” forward guidance appeared, which means decreasing the level of unemployment and stimultaneously increasing the percentage standards or marking such level of inflation below which there can be no percentage standard raise.

In conclusion, EUR/USD managed to get out of serious problems. What helped, was good stock exchange's behaviour and Mario Draghi. Today the main currency pair gained also „an optimism injection”. German Ifo appeared to be the highest since spring 2011 (109,3 points vs 107.9 prognosis). Ifo institute president Hans-Werner Sinn stated in report's comment, that „German economy looks towards the winter months with trust”.

Zloty close to 4.20 level. Something optimistic

In the morning zloty tests the level of 4.20 per euro. Yesterday afternoon we also reached this level although the closing was 1 groshen lower. Interesting fact is that despite the significant bounce of EUR/USD, stock exchange growths and data for Polish econymy according to previous forecasts (industrial production) we are not closer to the middle of level of 4.16-4.20, but by its upper limit. The chances of us finishing the week inside the side trend channel are bigger, than bouncing above its limit.

I recommend you to listen to the interview with HSBC chief of global strategy at currency market, David Bloom http://video.cnbc.com/gallery/?play=1&video=3000220206 . You can hear there many positive informations about the condition of Polish economy including the statement, that the knees of Polish ecomonists should not tremble with fear before retreat of the amount loosening by USA, but they should tremble with joy, because the national economy does not have inequalities in balance of payment and has a low debt level. But it's also worth to notice two inaccuracies in Bloom's statements, when he speaks of possible percentage standards decrease in Poland (he should answer to this question, that there are no such plans or speculations about it at all), and also not precise answer for the question about stability of region's currencies (for example Czech koruna gor significantly weaker this year).

In conclusion, Polish zloty should stay below the level of 4.20 per euro. We should also be glad because of our good opinion amongst the foreign commentators, despite not always precise message.

Expected divisions of zloty pairs depending on the rate of EUR/USD:

EUR/USD rate 1.3450-1.3550 1.3550-1.3650 1.3350-1.3450
EUR/PLN rate 4.1600-4.2000 4.1600-4.2000 4.1600-4.2000
USD/PLN rate 3.0800-3.1200 3.0500-3.0900 3.1100-3.1500
CHF/PLN rate 3.3800-3.4200 3.3800-3.4200 3.3800-3.4200

Expected levels of GBP/PLN rate depending on GBP/USD:

GBP/USD rate 1.5950-1.6050 1.6050-1.6150 1.5850-1.5950
GBP/PLN rate 4.9700-5.0100 49900-5.0300 4.9500-4.9900

22 Nov 2013 11:16|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 Nov 2013 14:37

Daily analysis 19.11.2013

15 Nov 2013 11:37

Daily analysis 15.11.2013

14 Nov 2013 12:28

Daily analysis 14.11.2013

12 Nov 2013 11:55

Daily analysis 12.11.2013

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