Zloty Consolidates In "Optimal" Range, Flash Sep CPI Eyed This Week

EUR/PLN has trimmed its earlier losses, with price action supported by the 20-EMA for the second consecutive day. The rate last deals -60 pips at 4.5983, while the key exponential moving average kicks in at 4.5847. A break below that EMA would allow bears to target the 50-EMA at 4.5343. It is worth noting that the pair is consolidating within the 4.40-4.60 range, which government officials said would be "optimal".

• Poland's statistics bureau will publish flash September CPI data this Friday. Consensus looks for a deceleration in headline inflation to +8.5% Y/Y. Earlier this month, the NBP defied its own guidance and cut rates by 75bp with inflation still in double digits. Furthermore, this month's data will reflect the impact of pre-election measures taken by the government and state-owned fuel retailer to lower consumer prices. As a result, the reading will be of less importance than last month, but it will still be watched by the market as one of the inputs into the NBP's decision-making process.
• POLGB curve remains slightly steeper on the day. The Finance Ministry said that it will offer PLN5-8bn of OK1025, WZ1128, WS0429 and DS1033 bonds at an auction on Wednesday, while refraining from sales of WIRON-based notes, despite flagging potential for such a move. It also announced a plan to issue 1-year notes with an initial coupon of 6.50% and 2-year notes with a coupon of 6.75% next month (down from 6.75% and 6.85% previously) in order to "ensure that bond buyers have attractive investment opportunities". Yields on new notes will be higher than expected, given that the NBP reduced its policy rate by 75bp.