Zloty Loses Grounds Despite Positive News On EU Funds

EUR/PLN creeps higher and last changes hands +103 pips at 4.3348, with technically-oriented participants still on the lookout for a break out of the recent trading range. A clearance of Feb 7 high of 4.3564 is needed to send a bullish signal and turn the focus to the topside. Bears look for renewed sales towards and beyond Feb 1 low of 4.3069.

• MPC's Joanna Tyrowicz wrote in a LinkedIn post that interest rates should be increased to 7.75% in order to bring inflation to the target. Pekao analysts agreed with her diagnosis that inflation cannot be sustainably anchored at the target at the current level of interest rates, but they do not think a resumption of tightening could be backed by a majority of MPC members. Tyrowicz spoke to MNI, discussing her views in more detail, as she drew attention to core inflation.
• RMF FM reported that European Commission President von der Leyen will today announce that Poland will be able to tap both post-Covid recovery funds and cohesion policy funds (EUR136bn in total) amid progress in addressing rule-of-law concerns. Unblocking Poland's access to the latter pot of EU funds would be a positive surprise, with earlier reports focusing on the former one.
• Poland's unemployment rate ticked higher to 5.4% in January, in line with expectations. Meanwhile, the ILO unemployment rate rose to 3.1% in 4Q2023, topping the 2.8% consensus forecast. Judging by comments from local analysts, there is broad understanding that the January uptick is a purely seasonal phenomenon.
• POLGB yields are higher amid pressure to the wider FI space. The WIG20 Index refreshed cyclical highs and last sits 0.6% above its previous close, defying its usual strong correlation with the zloty.