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PLN: Zloty Revisits Multi-Year Highs Amid CE3 Outperformance

PLN
PolandCEEMEAEM BulletBulletEmerging Market News

CE3 FX outperform in the EMEA space, with EUR/PLN trading -64 pips at 4.1869. The pair remains in the vicinity of multi-year lows. Our technical analyst flags 4.1822, the 2.764 projection of the Nov 6 - 7 - 12 ‘24 price swing, as the next target on the downside. Meanwhile, bulls look for a rebound towards the 50-EMA, which kicks in at 4.2467.

  • NBP's Kotecki stated the obvious as he played down the odds of a rate cut in March. However, the policymaker also said that the start of the rate-cutting cycle is approaching quickly and a formal motion to reduce rates could be tabled in April. In his view, a "significant majority" of members is waiting for the moment when they could vote for a cut in a responsible way. Kotecki said that if the next inflation projection shows CPI returning to the target within 6-8 quarters, policymakers could start drawing up plans for future monetary easing. He also noted that Governor Glapinski's press conference last week better reflected the MPC's collective sentiment than his comments in January.
    • Note that following the Governor's presser last Thursday, there has been a debate between local analysts whether it should be interpreted as less hawkish than before. Some (e.g. ING) argued that the Governor "softened his tone", while others (e.g. Pekao) did not see any such softening.
    • In our interpretation, the tone of the presser was less hawkish than in January, although we did signal caution in making this claim. MPC's Henryk Wnorowski comments later on Friday corroborated our view, as he said that the presser was "much less hawkish" than the Governor's remarks in January.
    • Reaffirming her dissenting stance, MPC's Joanna Tyrowicz told MNI last week that wage and price dynamics argues against rate cuts and called for an improvement in the transparency of central bank communications.
  • POLGBs have moved away from lows but still are 2.4-2.9bp worse off, with the curve running a tad steeper. The WIG20 Index has added 0.2% this morning.
  • Reminder that PM Donald Tusk will unveil his government's new comprehensive economic strategy from the top of the hour.
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CE3 FX outperform in the EMEA space, with EUR/PLN trading -64 pips at 4.1869. The pair remains in the vicinity of multi-year lows. Our technical analyst flags 4.1822, the 2.764 projection of the Nov 6 - 7 - 12 ‘24 price swing, as the next target on the downside. Meanwhile, bulls look for a rebound towards the 50-EMA, which kicks in at 4.2467.

  • NBP's Kotecki stated the obvious as he played down the odds of a rate cut in March. However, the policymaker also said that the start of the rate-cutting cycle is approaching quickly and a formal motion to reduce rates could be tabled in April. In his view, a "significant majority" of members is waiting for the moment when they could vote for a cut in a responsible way. Kotecki said that if the next inflation projection shows CPI returning to the target within 6-8 quarters, policymakers could start drawing up plans for future monetary easing. He also noted that Governor Glapinski's press conference last week better reflected the MPC's collective sentiment than his comments in January.
    • Note that following the Governor's presser last Thursday, there has been a debate between local analysts whether it should be interpreted as less hawkish than before. Some (e.g. ING) argued that the Governor "softened his tone", while others (e.g. Pekao) did not see any such softening.
    • In our interpretation, the tone of the presser was less hawkish than in January, although we did signal caution in making this claim. MPC's Henryk Wnorowski comments later on Friday corroborated our view, as he said that the presser was "much less hawkish" than the Governor's remarks in January.
    • Reaffirming her dissenting stance, MPC's Joanna Tyrowicz told MNI last week that wage and price dynamics argues against rate cuts and called for an improvement in the transparency of central bank communications.
  • POLGBs have moved away from lows but still are 2.4-2.9bp worse off, with the curve running a tad steeper. The WIG20 Index has added 0.2% this morning.
  • Reminder that PM Donald Tusk will unveil his government's new comprehensive economic strategy from the top of the hour.