The Polish zloty, already on the verge of breaking the 3.80 EUR/PLN barrier, soared past the key psychological support level before the session had even begun in reaction to the nomination and extended last week’s gains by yet another 1.0% in morning trade. Gilowska started her first day in office by reassuring financial markets that fiscal discipline and quick euro adoption would remain key points of interest for the government. She quickly added though, much more in-line with Law and Justice policy, that she had always been opposed to setting a precise entry date long in advance. She also declared, that Poland would not join the EMU until it’s fully prepared to do so. Later in the day the morning rush slowly faded away - before noon the EUR/PLN pair eventually found support and shifted to sideways trade just above the 3.75 area.
We believe, that with the eco calendar empty and the zloty clearly in strengthening mode the sentiment on market should remain positive today. However, the stronger than expected performance of the PLN in recent days suggests that one should be on the lookout for a potential technical correction sometime soon.
(CSOB - Investment research)