Despite the solid performance from other
emerging markets, particularly the forint, the
Polish zloty found it hard to extend the midmorning
rally and eventually steadied in the
3.95 EUR/PLN area as the increasingly
disturbing politics continued to weigh down
on Polish markets. In fact the political turmoil
receded somewhat after a rather precarious
start of the week though, just as it has each
and every time when the conservativepopulist
coalition seemed to be in jeopardy
so far. However, we uphold our negative
short-term stance regarding the zloty as
tensions are more than likely to return before
September 30th along with the budget act
(at the latest).
Political turmoil keeps zloty weak
The heavy economic calendar could help to
live up today’s session after several days of
rather dull range trading. On the domestic
agenda, the GDP data will be by far the
most important event of the day, but as our
expectations concerning growth are spot on
the (revised) market consensus, we do not
expect much of a reaction from the zloty.
The MPC rate decision is a foregone
conclusion as well, so the zloty will most
likely look to core market data for inspiration
to break out of the current sideways trend.
An upward revision of the US 2Q GDP
reading could put pressure on emerging
market currencies although this might be
offset by softer than expected PCE inflation
data.
(CSOB - Investment research)