PLN: Polish Assets Under Pressure After Drone Incursion
Sep-10 08:56
Zloty price action has been driven by developments surrounding the downing of Russian drones that flew into the Polish territory overnight. EUR/PLN pared some of its early-morning losses, but then ticked higher again as PM Tusk confirmed that Poland has asked NATO to call Article 4 consultations.
- Latest communique suggest that the incursion was likely a deliberate large-scale Russian provocation, with multiple drones crossing from the territory of Belarus.
- EUR/PLN trades at 4.2609, 134 pips higher on the day, after hitting new monthly highs. Bulls look for gains towards Apr 16/Dec 25 highs of 4.3102/4.3114, while bears look for losses towards May 15 low of 4.2230.
- Local stocks have come under pressure on the back of geopolitical developments. The WIG20 Index now sits 2.1% below neutral levels; the broad-based WIG Index has shed 2.2%.
- POLGB yields have crept higher, curve runs slightly steeper. The Finance Ministry holds an auction for PLN6bn-10bn worth of OK0128, PS0730, WZ0930, DS0432, DS1035 bonds today.
- NBP's Dąbrowski said that loose fiscal policy and wage pressure pose inflationary risks and may mean that the central bank refrains from further cuts this year, although a 'small' cut by end-2025 is possible.
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UK DATA: MNI UK Labour Market Data Preview: August 2025 Release
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EXECUTIVE SUMMARY:
- With a continually softening labour market a necessity for another quarterly cut in November, Tuesday’s report will be keenly watched by the market. Unlike last month’s release there is no obvious smoking gun to watch out for as the revision to the flash payrolls print for June has returned the focus back to the wider report.
- Our primary focus therefore will return to private regular average earnings which are expected at 4.8%Y/Y in the 3-months to June based on the MNI median and Bloomberg consensus (vs 4.88% prior).
