Zloty Stabilises After Failed Attempts To Move Sustainably Below 4.30

EUR/PLN volatility subsided yesterday after a couple of failed attempts to sustainably breach 4.30 earlier in the week. ING expect further attempts next week, noting while there is demand for the pair below that level, some of such buying orders were already realised this week. They see potential for a move towards 4.27 within the next few weeks.

• The rate currently trades flat at 4.3167. A breach of 4.30 and Dec 13 low of 4.2935 would signal potential for a deeper sell-off. Bulls look for a recovery beyond Feb 7 high of 4.3564.
• The Finance Ministry will hold two POLGB offerings this month on March 13 (PLN5-9bn) and March 26 (PLN5-9bn), as well as one switch auction on March 19. When this is being typed, POLGB curve runs slightly flatter, with yields up to 1.8bp lower.
• Poland's S&P Global Manufacturing PMI unexpectedly improved to 47.9 in February from 47.1 prior. At the same time, S&P said that "it is s sobering that the current downturns in these key indicators [i.e. output and new orders] are now the longest on record since the Polish PMI survey began back in 1998," albeit "the worst of the downturn appears to have passed."
• Looking ahead, the NBP is widely expected to keep interest rates unchanged next Wednesday. The market will focus on forward guidance, trying to assess the potential for any rate adjustments during the remainder of the year. Next week's decision will be informed by a new macroeconomic forecast, which will shed some light on the central bank's thinking.