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PLN: Zloty Strength Keeps Multi-Year Highs In Play

PLN
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The zloty remains resilient today and outperforms all of its EMEA peers save for the HUF, which has drawn support from an inflation beat in Hungary (see our earlier update), and the RUB, which draws some support from an uptick in oil prices. Elsewhere, regional markets are looking ahead to the Munich Security Conference this weekend amid hopes for fresh signals on the trajectory of the ongoing Russo-Ukrainian war. EUR/PLN trades -55 pips at 4.1772 and is yet to test multi-year lows printed yesterday at 4.1729, but the underlying bearish bias remains evident. However, the rate is again testing the limits of a "normal" pace of depreciation, with the RSI flirting with oversold territory as we type.

  • ING write that the zloty draws medium-term support from a favourable and widening interest-rate differential and short-term support from an optimistic mood on equity markets and speculation that the Munich conference could bring an announcement of a ceasefire in Ukraine, which, in their view, may be premature. They note that the zloty gained during the PM's presser yesterday, even as it did not bring any breakthrough announcements from the government.
  • Millennium Bank note that the next technical level of note is 4.1620 but a potential move in this direction is dependent on sentiment on core markets, which may be influenced by US CPI data and Fed Chair Powell's scheduled remarks. Millennium write that hawkish MPC narrative supports the zloty, while they don't think PM Tusk's presser yesterday had much impact.
  • Pekao write that capital inflows to the Polish stock market and positive sentiment around the local economy helped support benchmark equity indices and further zloty appreciation. They admit that they had not expected EUR/PLN to move as far as to 4.17 in the foreseeable future. In their view, it is not sufficient that the move has been quite extended by this point, but a negative trigger would be needed to inspire a reversal, and they don't see any on the horizon.
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The zloty remains resilient today and outperforms all of its EMEA peers save for the HUF, which has drawn support from an inflation beat in Hungary (see our earlier update), and the RUB, which draws some support from an uptick in oil prices. Elsewhere, regional markets are looking ahead to the Munich Security Conference this weekend amid hopes for fresh signals on the trajectory of the ongoing Russo-Ukrainian war. EUR/PLN trades -55 pips at 4.1772 and is yet to test multi-year lows printed yesterday at 4.1729, but the underlying bearish bias remains evident. However, the rate is again testing the limits of a "normal" pace of depreciation, with the RSI flirting with oversold territory as we type.

  • ING write that the zloty draws medium-term support from a favourable and widening interest-rate differential and short-term support from an optimistic mood on equity markets and speculation that the Munich conference could bring an announcement of a ceasefire in Ukraine, which, in their view, may be premature. They note that the zloty gained during the PM's presser yesterday, even as it did not bring any breakthrough announcements from the government.
  • Millennium Bank note that the next technical level of note is 4.1620 but a potential move in this direction is dependent on sentiment on core markets, which may be influenced by US CPI data and Fed Chair Powell's scheduled remarks. Millennium write that hawkish MPC narrative supports the zloty, while they don't think PM Tusk's presser yesterday had much impact.
  • Pekao write that capital inflows to the Polish stock market and positive sentiment around the local economy helped support benchmark equity indices and further zloty appreciation. They admit that they had not expected EUR/PLN to move as far as to 4.17 in the foreseeable future. In their view, it is not sufficient that the move has been quite extended by this point, but a negative trigger would be needed to inspire a reversal, and they don't see any on the horizon.