Zloty Secures Marginal Gains, Final CPI Due Tomorrow

EUR/PLN sits 44 pips lower at 4.4376, struggling to test the boundaries of its recent trading range in the second half of a week dominated by reflections on the monetary policy outlook at home and globally. Bears continue to look for a sell-off past 4.4138, which limited losses on Jul 4.

• Poland's benchmark forward-looking interest rates have reacted to what has been perceived as the NBP's dovish pivot that found its expression in last week's press conference. 3-month WIBOR fell to 6.85% yesterday after staying virtually unchanged at 6.90% since March. 6-month WIBOR was at 6.80% yesterday, following months of staying at 6.95%. Most consumers in Poland take out variable-rate mortgages (they amounted to 86% of all PLN mortgages at the end of 2022, per Business Insider), typically based on WIBOR.
• Recent NBP considerations combined with Fed musings have conspired to exert further pressure on Polish rates today. POLGB yield curve bull steepened, with the short end leading gains in local FI space. The FRA curve shifted further to the downside, hitting new cyclical lows.
• The focus in Poland turns to final June CPI data (flash reading was +11.5% Y/Y), due tomorrow at 09:00BST/10:00CEST. Later in the day, May current account balance will cross the wires at 13:00BST/14:00CEST.