The Polish zloty closed roughly unchanged against the euro as the unit struggled and eventually failed to break out of the tight 3.98-3.99 EUR/PLN range. With strong technical levels in place and the political (and hence fiscal) outlook rather hazy the wait-and-see stance seems to be the only viable short term scenario for the zloty. Thursday’s CPI numbers could have the potential to change the picture if the headline number comes far off our 1.4% y/y but since estimate is in-line with the market consensus according to a fresh Reuters poll we do not see much room for a reaction from the market.
The current account and trade balance results will be the highlight of the session today. We expect a slight improvement in the C/A balance in July (EUR 200 m) - mainly because of the improved balance of income and higher trade surplus (EUR 100 m) which should be, if anything, positive news for the zloty since the market consensus stands at –200 m and –100 m EUR respectively for the C/A and TB. However, the market has show a lot of resilience to the current account data in recent months and with the unnerving politics in the background it will most likely take the release in its stride today as well.
(CSOB - Investment research)