Zloty Inches Higher, Shrugs Off Local Data

EUR/PLN remains heavy and last deals at PLN4.4323, down 33 pips on the session, after refreshing cyclical lows at PLN4.4278. From a technical perspective, bears look for losses past Dec 9, 2020 low of PLN4.4175. On the flip side, bulls see the 20-EMA at PLN4.4714 as their initial target.

• Polish retail sales missed expectations, rising 1.5% Y/Y in May versus +2.7% expected. Real retail sales fell 6.8% Y/Y versus -5.9% expected. The zloty has shown limited reaction to further evidence of weakness in consumer demand.
• This comes after industrial output, PPI and wage data crossed the wires on Wednesday. Based on these releases, Credit Agricole maintained their GDP growth outlook for 2023 at +1.2% Y/Y. ING wrote that the risk of NBP rate cut by the end of 2023 remains elevated, although the full easing cycle should only start in 4Q2024. Pekao kept their 2023 GDP forecast at +0.9% Y/Y.
• POLGBs have eased across the flattened curve this morning. The Finance Ministry yesterday sold PLN5bn of bonds (PLN0.75bn of OK1025, PLN1.75bn of PS0728, PLN1.5bn of WZ1128 and PLN1bn of DS1033) to boost state development fund BGK.