The FX market returned to strengthening mode ahead of the industrial output numbers as the emerging market sentiment improved yesterday morning. The IO figures which highlighted the afternoon (see more in the fixed income part) came in stronger than expected and brought about a shaky reaction from the Polish zloty. At first the EUR/PLN inched south on signals that the Polish economy is performing well only to return to pre-publication levels just minutes on impact from the weaker bond market sentiment. In the end however the zloty managed to capitalize on the stronger than expected output figures and ended the day just above 3.88 EUR/PLN.
Nothing on the economic calendar, so the regional sentiment and core markets will play the leading role today for the zloty today. On the domestic front, politics is starting to slowly come into the picture as both the Polish Peasants Party (PSL) and the right wing populists from LPR seem more and more keen to enter the ruling coalition with the conservatives and leftist Samoobrona. However, even if the deal is sealed we would expect no major reaction from the zloty which has shown exceptional resilience to what’s been going on in politics in recent months.
(CSOB - Investment research)