Zloty Edges Higher, Holds Familiar Range

EUR/PLN continues to operate within a familiar range, despite the release of below-forecast CPI data yesterday, amid expectations that the NBP will keep rates unchanged in the coming months. The key WIBOR rates (3-Month/6-Month/1-Year) have flatlined around 5.85%, testifying to these expectations. Post-CPI moves in FRA contracts have been trimmed this morning, with POLGB curve bear steepening to some degree.

• Following the release of the data, MPC's Ireneusz Dabrowski commented that "we have a positive ex-post real interest rate." PKO cited this comment, as well as the significantly lower starting point for the new inflation projection, and the prospect of a continued fall of core inflation as reasons keeping a March rate cut on the table. Most desks, however, do not expect the NBP to take action next month.
• EUR/PLN last deals at 4.3395, a touch lower on the day, with familiar technical levels in play. Bears look for losses past the 4.3069 area (Feb 1 low), which would expose Dec 13 low of 4.2935. Bulls see Feb 7 high of 4.3564 as their initial target.
• The WIG20 Index has added 1.5% today, printing new cyclical highs at 2,380.75. It struggles to make a sustained break above recent resistance levels though. Should the 2,380 area give way, bulls could take aim at Jan 13, 2022 high of 2,429.