Daily analysis 29.10.2012

Better then expected GDP data from the U.S lifted the EUR/USD and sensitive to the sentiment currencies.

Better than expected GDP data (2.0%; est. 1.9%) form the U.S economy improved the mood on the currency market. EUR/USD jumped around 40 pips to 1.2960, and PLN strengthen around 0.015 PLN to 4.1350 comparing to the quotes before the report. However on the Asian session the common currency lost all its gains and was trading around 1.2920.

The shut down of the U.S markets should not have a significant effect on the currencies. After 17.00 CET I will only expect a lower volatility similar to that during public holidays. The lack of important economic data can cause that the EUR/USD will be moving the whole day in the low range.

On Friday the IMF sent message to the markets that Spanish bank situation is improving gradually. In the same tone the fund speaks about the debt market. The IMF sees that after the EBC intervention (verbal until Spain asks for help), yields has been down significantly, but more deep reforms are needed. The EUR/USD didn't react to the news.

The PLN has reduced some Thursday's losses thanks to stronger GDP data from U.S. The situation on the Polish pairs today will be poorly depended on the global risk sentiment. In the coming days Poland will offer 5-year bonds denominated in JPY. Its yields will be less than 70 basis points higher than the Japanese bonds. According to Bloomberg the demand for the Polish papers will be strong even though the prices are high. The Asian funds are looking for yields & safety, and Polish debt seems to a good bet.

Expected PLN value according to the EUR/USD levels:

Technical analysis EUR/USD: technical situation on EUR/USD has improved a bit. Both Thursday and Friday close were above 1.2900 mark, and above the key supports levels (23.6 retracement level and 50 DMA). However, the base scenario is still bearish, and the next target for the coming days is support level around 1.2750-1.2730. Only the come back above 1.3050 will signal the return of bullish trend.

Technical analysis EUR/PLN; the base scenario for the EUR/PLN is still bullish with the first target around 4.17-4.18 (50 DMA and 38.2% Fibonacci retracement). If EUR/PLN breaks this level it will open the way to around 4.2300.

Technical analysis USD/PLN: USD/PLN has corrected slightly on Friday but the bullish move is still the base scenario with targets around 3.2700 (200 DMA).

Technical analysis CHF/PLN: Similarly to the EUR/PLN, the CHF/PLN has corrected slightly, but the base scenario is still bullish with the first target around 3.4600 (200 DMA, and 38.2% Fibonacci retracement level.