Zloty Comes Under Pressure On Weak European PMIs, Cautious Sentiment

EUR/PLN has added 168 pips to last trade at PLN4.4390 as CE3 currencies have come under pressure following the release of weak European PMIs (Germany, France, Eurozone). The pair has moved away from yesterday's cyclical low as a result, with bulls looking for gains towards the 20-EMA at PLN4.4674. Bears keep an eye on Dec 9, 2020 low of PLN4.4175, followed by the PLN4.4 figure.

• The zloty proved resilient this week despite what was, on balance, a weak package of macroeconomic data. Yesterday's below-forecast retail sales report added to the picture of weakening economic activity.
• Optimism surrounding expected FDI inflows (Intel's $4.6bn investment in Poland announced last week) may have helped shield the zloty from the impact of weak data over the past few days.
• NBP Deputy Governor Kightley expressed optimism about easing inflation expectations. This stands in contrast with yesterday's comments from MPC's Wnorowski, who flagged them as a key pro-inflationary factor.
• Fitch and S&P are expected to keep Poland's sovereign credit ratings unchanged today, according to all local sell-side desks whose notes we have reviewed this morning. Both agencies rate Poland at A- with a stable outlook.
• POLGBs extend yesterday's gains, with the yield curve bull flattening in morning trade. The WIG20 Index has shed ~1.2%, printing its weakest levels in more than a week.