Zloty Loses Ground & Participants Add Dovish NBP Bets Following Release Of CPI Data

EUR/PLN has crept higher and the Zloty underperforms its EMEA peers following the release of below-forecast CPI data out of Poland. The rate last changes hands +114 pips at PLN4.5873 and bulls set their sights on the 20-EMA at PLN4.6261. Conversely, bears see May 30, 2022 low of PLN4.5599 as their next target.

• Flash data for April showed that Poland's headline CPI inflation slowed to +14.7% Y/Y from +16.0% recorded in March, cooling more than forecast in a Bloomberg poll of analysts (+15.0%). Despite the larger than expected drop in headline prices, local sell-side desks warned that food prices were the main disinflationary factor, while core inflation likely remained elevated. We will only get core CPI figures on May 16.
• The data inspired some dovish NBP repricing, with Poland's FRA curve shifting lower. Participants likely interpreted the release through the prism of central bank communications, with Governor Glapinski suggesting that core inflation will eventually follow headline inflation lower. When this is being typed, 6x9 FRAs trade at a 39bp discount to the 3-month WIBOR.
• POLGBs are firmer across the flattened curve, yields last sit 4.3-8.8bp lower. The WIG20 index has shed ~0.9%, pulling back from cyclical highs.