Zloty Catches Breather Ahead Of NBP Rate Decision

The NBP's rate decision headlines the local economic docket today, but there is broad consensus that monetary policy parameters will remain unchanged. There seems to be little scope for any major surprises in the statement, which turns the focus to the press conference with Governor Adam Glapinski tomorrow.

• EUR/PLN trades flat at 4.3090, struggling to pierce its 100-DMA (4.3097) after piercing the psychologically significant 4.30 figure. A break above the 100-DMA would open up May 1 high of 4.2442. Bears continue to look for a pullback towards and beyond the 4.25 area.
• ING write that zloty depreciation should be short-lived, with EUR/PLN expected to move towards 4.25 by the end of this month and towards 4.20 thereafter. Santander believe that although the risk of further near-term depreciation remains, the zloty should recover over the longer term and EUR/PLN could approach 4.20 later in the year. Pekao agree that EUR/PLN could return to the 4.25 area after its recent weakness.
• POLGB curve has twist steepened to an extent, with yields last seen -1.2bp to +1.0bp. The WIG20 Index sits marginally above neutral levels after a sharp sell-off on Tuesday.