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PLN: Zloty Lags Behind Regional Peers, Eyes On NBP Speak

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

The zloty remains the worst CE3 performer this week, with NBP Governor Glapinski's hawkish forward guidance coming under renewed scrutiny in the light of the latest rounds of central bank speak. EUR/PLN deals at 4.2789, up 50 pips on the session. Familiar technical levels are in play, with bulls looking for a rally above the 50-EMA (4.2850). Bears look for a renewed test of the 4.25 area, with the 50-DMA having a look below the 200-DMA in what may result in a formation of a "death cross".

  • Ludwik Kotecki this morning reiterated that the Governor's guidance did not reflect the MPC's collective view, in breach of the MPC's rules of procedure, and reaffirmed his openness to start discussing rate cuts in March. This came after Ireneusz Dabrowski wrote on X that inflationary processes are under control. As a reminder, the NBP will hold its first monetary policy meeting of 2025 next week.
  • In the grand scheme of things, the zloty has faced headwinds from the prospect of a more hawkish Fed and incoming US administration's aggressive trade policy. The combination of these factors applied some pressure to the EM FX space earlier this week.
  • Local political developments remain under scrutiny, as per our morning news summary, albeit there has been little in the way of market-moving headlines on that front. For the record, the first round of the presidential election has been called for May 18, with a potential run-off on June 1.
  • POLGB yields have pulled back from initial highs ahead of today's auction. The Finance Ministry offers for sale PLN6bn-10bn (preliminary communique pointed to a size of PLN6bn-11bn) of OK0127, WS0429, PS0130, WZ0330, IZ0831 and DS1034 bonds today.
  • The WIG20 Index has edged lower by 0.1%. The index decoupled from regional peers PX and BUX in 3Q24 and declined from there, struggling to regain poise since.
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The zloty remains the worst CE3 performer this week, with NBP Governor Glapinski's hawkish forward guidance coming under renewed scrutiny in the light of the latest rounds of central bank speak. EUR/PLN deals at 4.2789, up 50 pips on the session. Familiar technical levels are in play, with bulls looking for a rally above the 50-EMA (4.2850). Bears look for a renewed test of the 4.25 area, with the 50-DMA having a look below the 200-DMA in what may result in a formation of a "death cross".

  • Ludwik Kotecki this morning reiterated that the Governor's guidance did not reflect the MPC's collective view, in breach of the MPC's rules of procedure, and reaffirmed his openness to start discussing rate cuts in March. This came after Ireneusz Dabrowski wrote on X that inflationary processes are under control. As a reminder, the NBP will hold its first monetary policy meeting of 2025 next week.
  • In the grand scheme of things, the zloty has faced headwinds from the prospect of a more hawkish Fed and incoming US administration's aggressive trade policy. The combination of these factors applied some pressure to the EM FX space earlier this week.
  • Local political developments remain under scrutiny, as per our morning news summary, albeit there has been little in the way of market-moving headlines on that front. For the record, the first round of the presidential election has been called for May 18, with a potential run-off on June 1.
  • POLGB yields have pulled back from initial highs ahead of today's auction. The Finance Ministry offers for sale PLN6bn-10bn (preliminary communique pointed to a size of PLN6bn-11bn) of OK0127, WS0429, PS0130, WZ0330, IZ0831 and DS1034 bonds today.
  • The WIG20 Index has edged lower by 0.1%. The index decoupled from regional peers PX and BUX in 3Q24 and declined from there, struggling to regain poise since.