The Polish zloty held to a tight range in the 3.82-3.83 EUR/PLN area on Thursday, with politics continuing to cap gains and the eco calendar void of data. PiS indicated several days ago that it would return to talks and probably ratify the “stabilization pact” deal with parliamentary fringe groups today, meanwhile Self-Defense and LPR have apparently begun a counteroffensive. The two populist groups announced that they might form an alliance against PiS in case the president calls on earlier elections. According to recent opinion polls both these parties could even find themselves out of parliament following the potential snap poll, which puts them at the mercy of the president. We think that such an alliance will not prevent PiS, Self-Defense, LPR and PSL from sealing the “stabilization” deal, although it’s obviously not a marvelous start to their partnership.
The upcoming weeks in parliament will be the ultimate test for the conservative-populist arrangement, which will either result in pre-term elections or in a shaky political status quo. Hence the erratic political outlook will keep the market on the edge in the foreseeable future. As for today politics will be the main driver for the market.
(CSOB - Investment research)