Zloty Comes Under Pressure, WIGBANK Sinks After CJEU Delivers Opinion On FX-Loans Case

The Zloty sold off and Polish banking stocks took a hit as a legal aide to the Court of Justice of the European Union (CJEU) said in a non-binding opinion that Polish banks should not be able to charge interest on controversial CHF loans cancelled by courts.

• The opinion was issued by the CJEU's Advocate General and does not constitute a formal ruling in the case brought by Polish consumers. However, such opinions inform the Court's deliberations and are usually indicative of the later verdict.
• EUR/PLN spiked to PLN4.7773, then pared gains and last sits at PLN4.7716, up 121 pips on the day. Technical focus turns to the 61.8% retracement of the Sep 30 - Dec 26 sell-off/Feb 14 high of PLN4.7945/4.7987 and a break here would expose the 76.4% Fibo retracement level at PLN4.8340.
• POLGBs are showing resilience and remain broadly stronger on the day, despite ticking away from best their levels of the session on the release of the CJEU opinion.
• Local stocks have faltered, with benchmark WIG20 index down ~1.25% and testing support from its 50-DMA as the court opinion sends WIGBANK ~2.75% lower.