Zloty Falls Behind Regional Peers

EUR/PLN remains afloat after a nearly 0.5% upleg, which did not seem to coincide with any local headlines. The focus of local media outlets is on the NATO summit in Vilnius, which is also attended by Ukrainian President Volodymyr Zelensky.

• The rate last deals at 4.4548, up 119 pips on the session, clawing back the entirety of yesterday's losses. The technical picture remains unchanged from our previous update, with bulls looking for gains past the 50-EMA/round figure at 4.4945/4.5000.
• POLGBs have pulled back from highs, with the move primarily affecting the longer end of the curve. This leaves the curve running steeper and sitting lower on the session. Poland sold PLN5.95bn of bonds at a switch auction, after which the Finance Ministry said that 94% of its 2023 gross borrowing needs are now financed.
• Local FRAs hold earlier losses, operating near cyclical lows. Following last week's MPC meeting/presser there has been a growing conviction that the NBP will cut rates this autumn, which multiple analysts think would be a mistake from the perspective of achieving the inflation target.