Turbocharged Zloty Corrects Initial Gains

EUR/PLN sold off sharply in reaction to the exit poll, which showed that three pro-EU opposition parties were on track to form the next government, with a relatively comfortable majority in parliament. The rate dipped as low as to 4.4541 before trimming the bulk of those losses to last change hands at 4.4975, down 372 pips on the day. EUR/PLN implied volatilities have tumbled across the curve.

• From a technical perspective, bears look to pierce the 4.45 mark before taking aim at round figure/Jul 31 low of 4.4000/4.3986. Conversely, bulls look for a rebound above Oct 13 high of 4.5531.
• POLGB curve has twist flattened, with yields last seen +8.8bp to -16.7bp. Polish FRAs advanced across the curve, with participants trying to estimate the impact of the elections on NBP rate outlook.
• The WIG20 Index has added 4.4% today, with sentiment boosted by the preliminary election results. The WIGBANK Index has soared almost 7% to fresh cyclical highs.
• The focus will remain on the ongoing vote count in the coming hours, especially after the surprised provided by the Slovakian election two weeks ago, where exit polls were considerably off the mark. Uncertainty will linger until the announcement of official results, which may happen as late as on Tuesday. However, the numbers returned by the late poll (i.e. factoring in partial official results) this morning were reasonably close to those returned by the exit poll.