Zloty Keeps Losing Altitude On Eve Of NBP Rate Announcement

EUR/PLN overnight implied volatility has advanced ahead of tomorrow's NBP monetary policy decision, albeit from a medium-term perspective it remains relatively subdued at 7.73%. The 1-week tenor (last 6.99%) has climbed to its highest point in one month. With interest rates universally expected to stay unchanged tomorrow, the focus will be on any tilts to the central bank's language.

• The market is fully priced for a stand-pat decision tomorrow, with most members of the rate-setting panel maintaining their support for sticking with a "wait-and-see" approach until data warrants a change in tack.
• Looking further afield, the 3-month WIBOR vs. FRA 9x12 spread has moved away from January lows but remains negative, suggesting that market participants still expect the NBP to lower interest rates this year.
• Spot EUR/PLN has added nearly 200 pips to last change hands at PLN4.7659. The RSI is on the brink of overbought territory as we type as recent technical developments have strengthened the underlying bullish theme. Topside focus falls on Nov 16 high of PLN4.7848.