The Polish zloty retreated from a three-week high on Friday following the release of current account (CA) figures for August. CA balance reached - 719 million euro while markets on average expected a milder deficit of 213 million. A wide gap between income account´s revenues and expenditures (-1 738 million euro) was a major surprise reflecting ongoing strong outflow of dividends from Poland.
Although the high income deficit may prove to be a one-off event in retrospective and partial compensation of lower dividends outflow in July (see the chart), it easily surpassed August´s services and goods surplus of 779 million. Although the zloty weakened right after the release, its losses remained limited. The EUR/PLN pair stayed well below a resistance at 4.20 to eventually close barely changed.
Regarding the week ahead, although the calendar is well-filled with data releases (especially in Poland), markets will probably focus on ongoing fiscal policy debates in the US. During the weekend, the search for a compromise allowing to end the government shutdown and to avoid a debt crisis shifted to the Senate, where the standoff escalated when Democrats reopened contentious issue of automatic spending cuts, dampening thereby hopes for a short-term resolution of the plot. This may start to weigh on regional CE currencies, especially on those bearing