Another nervous session for the Polish zloty as emerging market jitters kept the unit on the edge on Thursday. With stop-losses broken the EUR/PLN pair soared to the 3.97 area amid weak liquidity conditions on Wednesday evening only to return to the 3.95 range yesterday morning as the entire region clawed back some of the overnight losses. Luck changed hands for the second time at noon as the zloty again tumbled against major currencies ahead of the US jobless claims report and statements from FED authorities later in the day. The US data came in on the weaker side of expectations which immediately helped the zloty inch back past 3.95 just before the closing. Just before the end of the session rumors appeared, that the rebound was the result of a FinMin intervention, but these speculations were later denied by on of the deputy finance ministers. The FinMin added, that it had not carried out any forex transactions this year and does not plan to do so in 2006.
The industrial output and PPI numbers are on top of today’s domestic agenda, but we doubt they will get much attention. Meanwhile the heat is likely to stay on the zloty ahead of the weekend due to the shaky sentiment toward emerging markets which should, along with the euro dollar behavior, stay behind most of the price action today.
(CSOB - Investment research)