PLN: Zloty Creeps Higher, Participants Assess Geopolitical Risk

EUR/PLN has inched lower as CE3 currencies pace gains in the EMEA FX space, with signals of a possible resumption of US-Ukraine talks and reports suggesting that the US continues to provide aid in some key areas other than military equipment (e.g. intelligence and communications) may have assuaged some concerns. On the other hand, uncertainty around the outcome of potential negotiations and the implications for regional security remains elevated, keeping CEE assets vulnerable to swings in geopolitical risk.

• When this is being typed, the rate deals -45 pips at 4.1611 and bears look for deeper losses towards recent cyclical lows (4.1272) and the next round figure (4.1000). Bulls eye the 50-EMA (4.2045) for initial resistance. Meanwhile, USD/PLN is posting sharp losses for the third day in a row amid a broad-based greenback sell-off, falling through the 3.90 figure and hitting new cyclical lows.
• There is little of note on the Polish economic docket until the announcement of the NBP rate decision next week. The central bank will most likely keep interest rates unchanged but the release of an updated inflation projection may be a pretext for the Monetary Policy Council (MPC) to revisit the debate on the interest-rate outlook.
• POLGB curve sits higher and runs steeper, despite ticking away from their earlier highs. The WIG Index has added 2.5% and the WIG20 Index is 3.2% better off.