The Polish zloty returned to the 3.82 EUR/PLN area after opening a touch softer on Tuesday, as the market continued to discount the expected successful budget vote later that day. With no fresh negative news from politics buyers gradually returned to the marketplace pushing the EUR/PLN pair past successive support levels in relatively calm trade. The largest move of the day came just short of the closing and was purely technical in nature. Stop-loss transactions kicked in at just above 3.83 forcing the EUR/PLN down to the 3.81-3.82 range. The positive result of the budget vote should give the zloty further support hence an attempt at 3.80 EUR/PLN is not out of the question today. In the long run however the vote changes little as far as the political outlook is concerned, with the prospect of earlier elections depending mainly on whether PiS manages to form a stable coalition (most likely with the populists) or not.
(CSOB - investment research)