Zloty remains stable (Daily analysis 16.04.2018)

Small changes in the global currency market. The rouble pared some of the recent losses. Inflation in Switzerland and statements from the SNB did not help the franc. S&P's decision to rate Poland without impact on the zloty. The Polish currency remained strong.

The most important macro data (CET - Central European Time). Surveys of macro data are based on information from Bloomberg unless noted otherwise.

• A lack of macro data may noticeably impact the analyzed currency pairs.

Without serious consequences

News concerning Syria had limited impact on the global markets. Around midday, the European indexes were close to the levels of Friday's closure. Currencies also remained stable, and they have been resistant to both geopolitical conflicts and reports of a possible trade war between the US and China. The fact that tensions in the Middle East have decreased slightly may also be proved in the oil's value. It fell by about 1.5% compared to the end of last week. The downward pressure may also slowly decline on the rouble. Despite the fact that the US is announcing further sanctions, the Russian economy can handle them due to high interest rates and low inflation, as well as a current account surplus. The local currency should also be much more stable than in the crisis of 2015-2016, given the persistently high oil prices.

Franc still under pressure

The weakness of Swiss currency has been still noticed in the global market. The EUR/CHF pair is moving close to the 1.19 boundary, i.e. the highest levels since mid-January 2015. In turn, the franc in relation to the zloty was the lowest since December 2014, just above the 3.50 PLN.

Inflationary processes in Switzerland clearly do not help the franc. Producer prices fell by 0.2% month-on-month in March. The franc was also negatively affected by Thomas Jordan's weekend statement for La Liberte. The head of the SNB said that the financial markets are still 'fragile' and therefore, it is too early to tighten monetary policy. "We do not want to provoke an increase in the franc's value," Jordan added.

Still as a core scenario remains relatively weak Swiss currency. It is even possible that the EUR/CHF pair will brach the 1.20 limit, which would increase the chance of CHF/PLN falling to the range of 3.40-3.50 PLN.

S&P with limited impact on zloty

S&P's decision to increase the rating perspective for the Polish economy is, of course, a positive sign. However, it was already calculated in the exchange rate of the zloty and the level of fiscal risk for Poland. For a few weeks now, CDS measuring the probability of a country's insolvency has been at their lowest levels in a decade.

Therefore, the zloty should continue to benefit from the good sentiment in the region and it is possible that the recent increases will be maintained despite worrying reports on the foreign trade balance in recent months. The core scenario assumes that the EUR/PLN pair will remain close to current levels if nothing extraordinary happens on the global market.