Zloty Loses Shine After EUR/PLN Probed Water Under Recent Lows

EUR/PLN has found poise again and crept higher after refreshing cyclical lows at PLN4.4767. The move is considered corrective at this point, with the pair changing hands +94 pips at PLN4.4960. Bulls continue to eye the 20-EMA at PLN4.5410, followed by May 18 high of PLN4.5547.

• Survey data included in the statistics office's release on consumer confidence suggested that inflation expectations eased in May. The index capturing 1-year ahead inflation expectations fell to 14.5 this month from 18.9 previously, which is the lowest reading since September 2016. It is difficult to quantify anticipated inflation rate based on these data, but mBank analysts estimate that it "fell by 0.2-0.6pp and remains around +10% Y/Y."
• Deputy Finance Minister Artur Sobon yesterday said that the government will keep the VAT rate on food at zero at least through the year-end. The official assessed that inflation and high interest rates are expected to stick around for another 3-4 years.
• POLGBs remain on the front foot, despite pullbacks off highs seen across the curve around 12:25 London time. Bonds last trade 0.3-2.3bp richer. The focus on the FI front turns to an auction for PLN4-7bn of bonds scheduled for tomorrow.