Zloty Rebounds After Yesterday's Sharp Sell-Off

The zloty shows resilience and is close to erasing the entirety of yesterday's 0.8% loss versus the euro, outperforming all its EMEA peers save for the South African rand. EUR/PLN trades at PLN4.4579, down 260 pips on the day, with bears looking for a dip through Jun 12 low of PLN4.4307 and towards Dec 9, 2020 low of PLN4.4175. Bulls keep an eye on the 50-EMA at PLN4.5463.

• Some desks have been taken off guard by yesterday's zloty depreciation, which came in spite of the absence of major PLN-negative headlines. Alior Bank suggested that the zloty was weighed on by narrower-than-expected current account surplus reported by Poland, but Millenium Bank deemed it unlikely, noting that yesterday's move was a technical correction. Pekao said that EUR/PLN was bought by "opportunistic" investors and such behaviour coupled with global factors could push the rate higher in the near term. BGK suggested that the rate could break above PLN4.50, especially if we get hawkish messaging from the FOMC today.
• The focus is on key risks ahead, namely final May CPI data and the CJEU's verdict on CHF mortgages, both due tomorrow morning.