Zloty Keeps Weakening, Poland's Current Account Balance Flips Into Deficit

EUR/PLN keeps pushing higher and last deals at PLN4.7956, up 240 pips on the session, having a look above the 61.8% retracement of the Sep 30 - Dec 26 downleg. The next bullish target is the 76.4% Fibo retracement of that downswing, which is located at PLN4.8340.

• POLGB curve runs flatter & sits higher at typing, with short-end yields happy to consolidate near session highs. The WIG20 index hovers just above its 50-DMA, struggling to stage a meaningful bounce off that moving average.
• Amplifying pressure to the Polish Zloty, which is now the worst EMEA performer today, could be President Duda's decision to send a key bill agreed with the European Commission to the Constitutional Court, which derails the government's plans to swiftly pass the law and unlock access to >EUR35bn in recovery funds.
• Post-NBP musings might be providing further headwinds to the Zloty. The central bank left interest rates unchanged last week but was unfazed by the depreciation of the local currency, while a hawkish MPC member cast doubt on Governor Glapinski's dovish inflation forecast today.
• On the data front, Poland's current account balance flipped into a deficit of EUR2.526bn in December from a surplus of EUR313mn recorded in November. The shortfall was deeper than the expected EUR1.541bn.