Poor Risk Sentiment Dents Zloty Ahead Of Key NBP Decision

The zloty has depreciated as EM FX space comes under pressure from weak Chinese Caixin Services PMI released overnight, which has encouraged participants to look for safety, supporting a greenback rally. There has been little in the way of market-moving domestic catalysts on the eve of a pivotal NBP rate decision. Poland's central bank may inaugurate a rate-cutting cycle as soon as tomorrow, albeit many analytical desks concede that it's an extremely close call.

• EUR/PLN operates +110 pips on the day at 4.4817 at typing. Topside focus falls on 4.5040, which capped gains on Jul 6. Conversely, Jul 31 low of 4.3986 provides a key layer of support. POLGB curve has twist flattened at the margin, with yields last seen +0.7bp to -4.2bp.
• As usual, there is no fixed time for the announcement of the NBP's rate decision and the subsequent release of the statement. Each time is typically announced shortly before a given publication. Governor Adam Glapinski will hold his press conference the day after at 14:00BST/15:00CEST.
• Pre-NBP musings are taking precedence over fiscal matters for the time being, but it is worth noting that Finance Minister Rzeczkowska gave an interview to Business Insider, in which she admitted that Poland could be targeted by the EU's excessive deficit procedure next year and flagged the extension of the "anti-inflationary shield" as an option (this would lower inflation but widen the expectation-beating deficit).