Zloty In Retreat, 20-EMA Gives Way To EUR/PLN

Sharp gains in EUR/PLN have allowed the pair to move firmly through its 20-EMA (4.4648) and it last deals +346 pips at 4.4827. It is difficult to identify any domestic catalyst behind such a strong rebound. Our technical analyst flags the 50-EMA at 4.5134 as the next layer of resistance.

• Marcin Mazurek, mBank's Chief Economist, told PAP newswire that space for "cautious" NBP interest-rate cuts will only appear in 2H2024 and suggested that the MPC is currently erroneously extrapolating recent disinflationary signals into the future. According to Mazurek, "whatever the MPC are saying now, doesn't mean much for the eventual trajectory of monetary policy." Polish 6x9 FRA has moved away from recent cyclical lows today, but the market continues to price rate cuts by the end of this year.
• POLGBs have reversed earlier gains and last trade 4.1-7.2bp cheaper across the curve, with 5s underperforming. The Finance Ministry sold PLN7bn of bonds at a regular auction and another PLN341mn in a top-up auction. After these offerings, the country has met around 92% of its gross borrowing needs for 2023.