PLN: Zloty Holds Onto Gains As Market Weighs Recent NBP Speak

Comments from a couple of MPC members casting doubt on Governor Glapinski's hawkish forward guidance from last week failed to exert any material pressure on the zloty. Worth noting that non-voter Deputy Governor Marta Kightley reaffirmed the Governor's rhetoric pointing to the lack of scope for interest-rate cuts next year. The zloty gained 0.4% against the euro yesterday, with no signs of any evident pullback this morning.

• EUR/PLN trades at 4.2665, a touch lower on the day, with bears looking for a resumption of losses and a move towards the 4.25 support area, where the key May 28 low of 4.2471 is located. On the topside, bulls initially look for a recovery towards last Tuesday's high of 4.3321.
• Pekao wrote this morning that the NBP Governor's hawkish comments seem to have got through to foreign investors. According to Pekao, investors do note that such an extended forward guidance horizon is very unusual in the EM space, but the market has now priced out the 1-2 rate rate cuts expected earlier (presumably through the end of this year).
• Benchmark 3-Month WIBOR was fixed at 5.85% yesterday and has been on a relatively flat trajectory in the vicinity of this level (5.85%-5.89% through the entirety of this year. PLN 6x9 FRAs last trade at a 11bp discount to 3-Month WIBOR, while 12x15 contracts trade 52bp shy of the benchmark rate.
• POLGB yields are a tad lower across the curve, last by 0.2-1.2bp. The Finance Ministry said it will offer OK0426, PS0729, WZ1129, DS1034 and IZ0836 bonds at a switch auction tomorrow, while buying back PS1024, PS0425 and WZ0525.