Zloty Trims Post-NBP Losses But Remains Worst EMEA Performer This Week

EUR/PLN sold off as the morning session went underway, despite relative stability in EUR/CZK (-0.04%) and EUR/HUF (-0.20%). The pair last deals at 4.6000, down 276 pips on the session, moving away from 4.6308 where it topped out after NBP Governor's presser yesterday. Profit-taking activity might be in play, with no fresh headlines crossing the wires this morning that could challenge the familiar narratives. Technically, bears see yesterday's low of 4.5668 as their initial target; bulls look for a renewed rally towards 4.6472, trendline resistance drawn from Sep 30, 2022 high.

• POLGB curve has bull steepened, yields sit 7.2-1.1bp lower, with 2s posting strongest gains in early trade. Core FI space is a tad firmer, but the fallout from yesterday's NBP rate decision may be lending some further support to local debt markets. Polish FRA contracts remain in free fall since the announcement of the NBP's rate decision on Wednesday.
• The WIG20 Index finds poise after a 3.8% sell-off over the past two days. The equity benchmark was weighed on by the WIGBANK subindex, which shed 4.7% on Wednesday and Thursday in reaction to the NBP's outsized rate cut, with Governor Glapinski signalling no concern about the ramifications for bank profitability. WIG20 has ticked higher this morning and last sits 0.3% above neutral levels.
• While the NBP meeting was the main event of the week in Poland, the focus swiftly turns to fiscal matters, with two largest political parties set to unveil their policy plans during separate campaign events on Saturday. Market participants will monitor new spending pledges after the government has already pencilled in a wider-than-expected fiscal deficit for next year.