Zloty Slips Alongside CE3 Peers Amid Weak EZ PMI Data

EUR/PLN changes hands +81 pips at 4.4804, lagging all its regional peers. European growth proxies such as the PLN, CZK and HUF have taken a hit from weak PMI outturns in the Eurozone and are the main EMEA underperformers. From a technical standpoint, a move through Jul 6 high of 4.5040 is needed to indicate potential for a firmer rally. Bears see Jul 31 low of 4.3986 as key initial support.

• Weak data from the local economy did little to hurt the zloty at the start to the week, with EUR/PLN respecting a familiar trading range, as it continues its short-term sideways trend. Santander suggest that weaker-than-expected data open up space for further declines in local interest rates, while a number of local sell-side desks are flagging the risk of earlier NBP rate cuts.
• Outside of Poland, services lagged expectations in the latest batch of PMI outturns from Germany, France and the Eurozone. Manufacturing generally fared better than expected, but remained in contraction across all three regions.
• POLGB curve has bull flattened, with yields sitting 4.7-6.4bp lower across the curve, as core FI space is on the front foot. Poland's Finance Ministry will offer PLN4-8bn of OK1025, PS0728, WZ1128, DS1030 and DS1033 bonds today.