The Polish zloty retraced dome of the recent losses on the back of the improving sentiment around the Turkish lira on Tuesday, but still found it difficult to break past 4.06 EUR/PLN as the imminent US rate hike loomed over emerging markets. Volumes were light throughout the day hence we would be careful to draw any decisive positive conclusions for the zloty from yesterday’s price action.
Central bank interventions in Turkey might spur spells of corrective action for the zloty which like has been hit relatively hard (given Poland’s strong fundamentals) by the recent emerging market sell-off, but until the global risk aversion recedes we see no reason to change our neutral-to-bearish short term PLN view. We do not see much upside for the zloty in the 3M perspective as well as the budget preparation goes into the final stage and fiscal concerns return to the agenda. Regarding today’s trading we should see ample resistance at 4.06 EUR/PLN hence range trade in the 4.06-4.11 EUR/PLN area seems the most likely scenario.
(CSOB - Investment research)