Zloty Faces Renewed Headwinds, Official Core CPI Data On Tap

EUR/PLN staged a failed recovery yesterday, erasing all of its initial gains into the close. Price action has been contained within a familiar range for the better part of this week, as the pair struggles to find a clear direction. This morning brought renewed gains, with EUR/PLN last dealing +174 pips at PLN4.4651, as the zloty lags all EMEA peers.

• From a technical perspective, bulls look for a swing above the 20-EMA, which kicks in at PLN4.4869. On the flip side, bears see Jun 12 low of PLN4.4307 as their initial target.
• Local economic calendar is lighter today, with the NBP set to release official core CPI readings for May (est. +11.5% Y/Y). We shouldn't see any surprises here, as most desks base their estimates on the details of final headline CPI data, which came out yesterday. Analysts see the data as bitter-sweet, acknowledging a welcome decline in core inflation, while warning of upside risks ahead.
• POLGBs have trimmed initial losses around the time when in-line final Eurozone CPI figures crossed the wires, while showing little reaction to local debt supply. The Finance Ministry sold PLN6.04bn worth of OK1025, PS0728, WZ1128, DS1030 and DS1033 bonds, attracting demand for PLN10.6bn.