EUR/PLN Returns Above 4.30, NBP Rhetoric Under Scrutiny

EUR/PLN has ticked higher, posting gains for the third day in a row, with POLGB yields slightly higher across the curve. The pair sits at 4.3060, a touch higher on the day, after closing above the psychologically significant 4.30 figure, which the market saw as a significant threshold in early March. With the pair now back above that level, bulls look for an attack on Feb 7 high of 4.3564. On the flip side, bears see Mar 11 low of 4.2749 as their initial target.

• NBP speak attracted some attention, with a couple of policymakers commenting on the interest-rate outlook. Ireneusz Dabrowski maintained the hawkish tone of his rhetoric, noting that rates are more likely to stay unchanged than fall this year and next. By contrast, Wieslaw Janczyk said that rates could be lowered as soon as in 3Q2024 and he would like to see at least 100bp worth of cuts in 2025. A recent PAP survey of Polish analytical desks showed that both officials are perceived as notably more hawkish than in November, when the previous poll was taken. The same survey showed that Ludwik Kotecki is now seen as slightly more dovish than before. Speaking lats Friday, he said that rates should stay put until end-2024 or could potentially be lowered in 4Q2024 if data outturns reveal major positive surprises.
• The WIG20 Index has stabilised as LPP shares corrected last Friday's sell-off, which wiped out around a third of the fashion retailer's market capitalisation. Setting aside the corrective nature of the move, strong preliminary earnings results, an aggressive reaction to the report that sent shares tumbling in the first place and comments from local brokers may have provided some relief. Trigon called the dip LPP shares "too deep," while the company's pricing is now more attractive to competitors, while Erste said that LPP's major risk is a reputation one; both have a "buy" rating on LPP shares, while Citi has just raised their recommendation to "buy" from "neutral."
• Looking ahead, a flurry of monthly activity data will cross the wires over the next few days, starting Tuesday. In the meantime, the NBP will publish February core CPI data this afternoon.