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Zloty Appreciates Despite Election Uncertainty

PLN

The zloty remains on a short-term appreciation trend, gradually unwinding losses registered in reaction to the NBP's surprise 75bp rate cut delivered in September. The central bank's rhetoric at this month's press conference (following a 25bp cut) pointed to a more cautious stance going forward.

  • When this is being typed, EUR/PLN deals at 4.5225, down 165 pips on the session. Bears look for losses past the 61.8% retracement of the Jul 31 - Sep 12 upswing at 4.5126 and towards the 4.50 mark. Topside focus falls on Sep 12 high of 4.6971.
  • Local headline flow is dominated by reports surrounding the upcoming parliamentary elections. EUR/PLN one-week implied volatility spiked higher on Monday, extending gains thereafter and climbing to a new cyclical high of 12.89% today.
  • The resignation of Poland's two most senior military officers stole the limelight yesterday amid reports suggesting that they were motivated by an escalating conflict between the incumbent administration and the military command.
  • While Poland's data docket is empty today, the statistics bureau will publish final September CPI readings on Friday. The detailed report will provide a fresh insight into inflation developments, allowing analysts to come up with estimates of core CPI and shedding some light on the outlook.

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