With cash flowing back into the entire region
the EUR/PLN pair found itself heading south
right from the start of the session. It was not
long before the market appeared to have run
out of steam. However, later the zloty
received further support as bond buyers
returned to the stage drawn by the softerthan-
expected June CPI data.
Consequently, the zloty ended the session in
the 4.02 area, just over 0.5% up against the
euro. On the political front Jaroslaw
Kaczynski’s government was sworn in by the
president Lech Kaczynski on Friday. As
expected, the cabinet lineup basically
remained intact, with the new FinMin
Stanislaw Kluza being the most important
change. Now it’s time for the vote of
confidence later this week (most likely on
Wednesday) in Parliament, which we think
will go along relatively smoothly.
The government should easily get the required
support (over 50 percent of the votes with at
least half of the 460 MP’s present) from the
PiS and its coalition partners. Even though
we are fairly confident that in doing so it will
not have to concede anything to the
populists, these might nonetheless try to put
pressure on Jaroslaw Kaczynski in the
coming two or three days. If so, we might
see some renewed nervousness from
financial markets early this week.
Other than politics, the data front is
heavy this week with the first release, on
corporate earnings and employment, due
today. Our estimate is in line with the market
consensus though, so the numbers should
not be a major market mover.
Zloty gains on lower inflation figures.
(CSOB - Investment research)