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Zloty Unfazed By Inflation Data But POLGB Yields Rise


EUR/PLN changes hands +19 pips on the day at 4.4696, showing a muted reaction to local CPI and GDP data. According to the flash reading, CPI inflation failed to ease to single-digit territory in August, raising questions about the potential for the NBP to cut rates as soon as next week (which seems to remain the baseline scenario of most sell-side desks).

  • From a technical standpoint, a clean break above Jul 6 high of 4.5040 is needed to open up scope for further gains. Meanwhile, losses past Jul 31 low of 4.3986 could reignite bearish momentum.
  • The impact of local macro data was more acute in local interest-rate markets. The news that inflation remained above +10% Y/Y in August triggered upswings in Poland's FRA curve and POLGB yields as expectations of an NBP rate cut as soon as next week moderated at the margin. That being said, the snap reactions from several local analytical desks suggested that they still expect the central bank to lower borrowing costs at the upcoming meeting.
  • Poland will release its POLGB supply plan for September. Santander write that "considering large borrowing needs for 2024, we expect an increase in bond supply already this year."

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