PLN: Zloty Paces Gains In EMEA Space, M'fing PMI Returns To Expansion

The 4.20 figure capped a rebound in EUR/PLN late last week, and the pair has pulled back from there this morning, as the greenback has lost some ground. The upswing in EUR/PLN on Friday coincided with the heated exchange between Ukrainian President Zelensky and US leaders, which precipitated the collapse of their negotiations.

• Poland's S&P Global Manufacturing PMI improved to 50.6 in February from 48.8, unexpectedly returning to expansionary territory after a three-year hiatus. The expansions in new orders, output and jobs helped push headline PMI higher, which came alongside other signs of recovery in business confidence, such as a solid improvement in the 12-month outlook and a relatively sharp increase in output prices. ING commented that the improvement was underpinned by domestic demand, which offset a continued decline in new export orders (albeit at a slower rate).
• In what may have seemed to be counterintuitive, EUR/PLN rebounded after the release of above-forecast Polish PMI data, cutting its intraday loss after a brief foray below 4.17, but the move was part of a broader uptick in EUR/CE3 FX. At the same time, the zloty strengthened against its regional peers (CZK, HUF) and remains the best EMEA performer today.
• When this is being typed, EUR/PLN trades at 4.1826, 112 pips lower on the session. Bears look for an extension of losses past the 4.15 figure and towards recent cyclical lows (4.1272). Conversely, the 50-EMA intersects at 4.2088, providing the initial layer of resistance.
• POLGB yields are higher, curve runs steeper. The announcement of the preliminary bond issuance schedule for March was positive for the local debt market, as the Finance Ministry is planning to sell just PLN10bn-20bn worth of POLGBs at two auctions after financing 50% of this year's borrowing needs.
• The WIG Index has shed 0.6% this morning; the WIG20 Index is 0.8% worse off.