Zloty Resumes Gains On Return From Public Holiday

EUR/PLN has turned heavy again and last changes hands -48 pips at PLN4.4678 after printing a new cyclical low at PLN4.4670, with losses limited by bear channel floor intersecting at that level. A clean break below PLN4.4670 would bring Jun 7, 2021 low of PLN4.4360 into view. Conversely, bulls need to reclaim the 50-EMA at PLN4.5580 to get some reprieve.

• The government unveiled revised economic forecasts for this year after the Cabinet approved amendments to the budget bill. The planned budget deficit was raised by PLN24bn (from the initial PLN68bn) due to higher military spending and bonuses for public sector workers. Poland now sees GDP growth at +0.9% Y/Y (vs. +1.7% in the previous spending plan) and assumes that CPI inflation will average at +12.0% Y/Y (vs. +9.8% prior). Prime Minister Mateusz Morawiecki said that he expects consumer inflation to drop below +10.0% Y/Y in Q4. As a reminder, Governor Glapinski said during his post-MonPol press conference (see our review here) that inflation could reach single-digit territory in September.
• There has been a downward adjustment to Polish FRA curve as local markets re-opened after a holiday, digesting Glapinski's presser held the day before.
• The central bank will publish the minutes of its May monetary policy meeting at 13:00BST/14:00CEST.