Political Risk Front & Centre Ahead Of Crucial Elections

EUR/PLN trades at 4.5452, up 61 pips on the session, with bulls looking for a move through Oct 4 high/round figure of 4.6494/4.6500 before setting their sights on Sep 12 high/round figure/61.8% retracement of the 2022 - 2023 sell-off at 4.6971/4.7000/4.7072. Bears eye support from the 61.8% retracement of the Jul 31- Sep 12 upleg at 4.5126.

• Uncertainty is elevated ahead of this weekend's parliamentary elections, where none of the conceivable scenarios seems to be unambiguously positive for the markets. The continuation of the current administration would set the scene for further tensions with the EU and questions surrounding central bank independence. A victory by pro-EU opposition could increase the odds of unfreezing EU funds earmarked for Poland, but any such government would be faced with the prospect of paralysing presidential vetos. A hung parliament would lead to a legislative deadlock and heightened political instability.
• EUR/PLN overnight implied volatility soared to a one-year high of 14.78% today, while one-week tenor remains close to its recent cyclical highs.
• Final readings confirmed that headline CPI inflation slowed to +8.2% Y/Y in September from +10.1% prior. Prices fell 0.4% M/M last month.
• The NBP will release current account balance for the month of August at 13:00BST/14:00CEST.