Zloty Woes Continue In Anticipation Of NBP Governor's Presser

The zloty extends losses as the market digests yesterday's jumbo-sized rate hike delivered by the NBP and braces itself for the Governor's press conference (14:00BST/15:00CEST). It is the worst performer in EMEA FX space for the second day in a row, with EUR/PLN breaking above its 200-DMA for the first time since February. The rate last deals +233 pips on the day at 4.5921 and bulls look for a move through the round figure of 4.60.

• The statement intimated that the MPC's decision was motivated by weak data from the real economy, but did not discuss the underlying logic in too much detail, sowing confusion among NBP watchers and prompting them to question the central bank's credibility. This brings today's presser into spotlight, with market participants seeking more clarity on the central bank's likely next steps.
• There is a debateamong analysts whether yesterday's move in rates was a one-off adjustment or the start of a cycle. Multiple desks expect the Governor to describe the 75bp cut as a front-loaded move, which might be followed by a pause, possibly through the year-end. This speculation may be indicative of what the market will be looking for in today's press conference.
• Bull-steepening impetus remains evident in the local FI space, with POLGBs last trading up to 7.5bp richer across the curve. FRA contracts remain under pressure, extending yesterday's declines. The spread between 3-Month WIBOR and PLN FRA 3x6 has widened to 155bp, challenging the "one-off adjustment narrative," as participants reacted to the NBP decision by boosting dovish wagers.