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Zloty Struggles For Clear Direction, Construction Output Disappoints


EUR/PLN last changes hands at 4.3156, little changed on the day. The pair hovers above support area around Feb 1 low of 4.3069 and a clean break here would bring Dec 13 low of 4.2935 into view. Bulls look for a rebound above Feb 7 high of 4.3564.

  • Poland's consumer confidence remained at -12.6 in February, with consensus looking for -11.1. Construction output unexpectedly shrank 6.1% Y/Y in January, defying expectations of a 5.5% expansion. Local sell-side desks took note of a grim reading, albeit Pekao suggested that it could be attributed to volatile weather conditions (benign in December and harsh in January). However, they also point to slower investments related to a cyclical pause in EU funds disbursement and political factors (looming local elections). Note that January retail sales will be released on Thursday.
  • Climate Minister Paulina Hennig-Kloska told TOK FM that the government is looking into options for lifting the energy price cap. A 15% increase from July is currently seen as the "mildest" option and the final path will probably be chosen within two weeks. The decision may significantly affect the inflation path in 2H2024, which the NBP said will inform its monetary policy decisions.
  • POLGB yields have pulled back from earlier highs but continue to operate above neutral levels. The WIG20 Index did refresh cyclical highs but has otherwise struggled to make any significant headway.

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