Within an hour of the opening the EUR/PLN hit a fresh 43 month low of 3.7890 and it looked as if the pair had managed to break past the psychological 3.80 support level. This was not to be the case however, partially thanks to the Warsaw stock exchange which paused for breath on Thursday. The zloty’s rally was not fully matched by bond market performance as well and soon ran out of steam. Consequently the EUR/PLN shifted to sideways trade and ended the session just below 3.80.
The positive global sentiment toward emerging markets suggests that the investment climate will stay positive for the zloty in the short run.. However, with politics still lurking in the background (the third and final budget reading in parliament is scheduled for next week) and the slightly softer bond and stock market performance on Thursday we expect the EUR/PLN to consolidate in the 3.80 area rather than strengthen further today.
(CSOB - Investment research)