PLN: FinMin Points To Impact On Exporters As EUR/PLN Tests Water Below 4.15
Feb-19 09:36
EUR/PLN closed below 4.15 yesterday, seemingly triggering some alarm bells, as Finance Minister Domanski said that zloty strength is putting pressure on local exporters. His comments were circulated a couple of days after the CEO of Mlekovita, one of the largest Polish dairy producers, complained that zloty strength is reducing the competitiveness of exports and called on the NBP to reduce interest rates.
- MPC's Kotecki said that in his view rate cuts could commence at the beginning of Q3 (and in September at the latest), and their scale this year could reach 50bp-100bp, although the upper end of this range would be difficult to achieve.
- In the meantime, the prospect of a negotiated pause/end to the war in Ukraine has been supporting regional assets over the past few weeks. The WIG-Ukraine Index has soared by more than 80% just this year.
- As a caveat, tensions between the US and Europe over how to handle future negotiations are coming to the surface, with Ukraine left out of the initial round of US-Russia negotiations hosted by Saudi Arabia.
- This morning has brought a corrective rebound in EUR/PLN, with CE3 currencies generally trading on a softer footing compared with their EMEA peers.
- EUR/PLN deals +64 pips at 4.1549. Bulls look for gains towards the next round figure (4.20) and the 50-EMA (4.2257), while the RSI remains in oversold territory. Initial support is at 4.1408, the 3.382 projection of the Nov 6 - 7 - 12 ‘24 price swing.
- POLGB yields have inched higher and sit up to 4.6bp above neutral levels.
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STIR: Citi Recommend Selling The SFIM5/M6 Spread
Jan-20 09:31
Citi recommended selling the SFIM5/M6 spread late last week.
- They noted that although the risk of an inflation resurgence later in 2025 is ”likely most acute in the UK, this may not rule out faster rate cuts later on from the BoE”
EQUITIES: The Banking sector leads in Europe, at a new multi Years high
Jan-20 09:25
- The Banking sector leads in Europe, SX7E Index makes a new 9.5yrs high, highest since August 2015, and this chart is one of the more interesting one going into 2025.
- The main upside of interest is at 163.34, the 2014 high and also the highest printed level since November 2011.
- SX5E is also making new 20yrs High (highest since Sep 2000), and the next hurdle will be eyed at 5200.00, now trading at 5160.00.
(Chart source: MNI/Bloomberg).
EUR: The EUR extends broader high
Jan-20 09:14
- The EUR is seeing broader base buying, testing intraday highs against the CAD, GBP, NOK, JPY, CHF, AUD and the SEK, while the EURUSD still lags somewhat, it is still leading and is up 0.40% on the day.
- After mostly seeing a mixed overnight session for the EUR, it is now in the green versus most G10s.
- EURGBP is testing the immediate resistance right here at 0.8463 High Jan 15, ahead of the next area of interest at 0.8471 61.8% retracement of the Aug 8 - Dec 19 downleg.
