PLN: Zloty Appreciates Amid Conservative NBP Talk, Geopolitical Musings Continue
Sep-15 09:45
EUR/PLN last deals at 4.2476, down 76 pips on the session, with bears still looking to pose a threat to May 15 low of 4.2230. On the flip side, the focus is on Apr 16/Dec 25 highs of 4.3102/4.3114.
- Poland is looking at a data-packed week, which started with the release of final August CPI figures this morning. Headline inflation was revised to +2.9% (versus +2.8% flash) but the general view seems to be that this does not change the overall signal sent by the latest CPI outturn. The NBP will publish its estimates of core inflation tomorrow, but local sell-side analysts see the most closely watched ex-food and energy metric at around +3.1% Y/Y. Later this week, Statistics Poland will release a suite of economic activity and labour market indicators for the month of August.
- Geopolitics remains a major theme in local headline flow amid ongoing Zapad-2025 military exercise beyond the eastern border and talks between Polish and Chinese top diplomats that went underway near Warsaw. Polish Foreign Ministry said that the planned joint media briefing has been cancelled on the request of the Chinese delegation.
- The Russian drone incursion last week weighed on the POLGB auction, which attracted demand for PLN9.3bn of debt. This resulted in a sale of PLN8.29bn of bonds against a planned sale of up to PLN10bn before a top-up auction, representing the first failure to allocate the full amount since October 2024. That said, overall market impact was relatively muted and the auction was not particularly weak in absolute terms.
- The NBP's perceived monetary policy stance shifted in the hawkish direction, according to the latest PAP survey, amid a flurry of comments emphasising the need to tread cautiously as inflationary risks continue to linger. In the latest interview, MPC's Kotecki told Money.pl that current fiscal trends are unsustainable and the room for further cuts is limited.
- Looking further afield, Moody's will review Poland's sovereign credit rating on Friday. Moody's currently rates Polish debt at A2, the highest score out of the three major agencies. A fortnight ago, Fitch revised the outlook on Poland's rating to negative, citing worrying fiscal trends and the adverse impact of the current political deadlock.
- POLGB yields are marginally mixed at typing, with 2s outperforming. The broad-based WIG Index has added 0.7% and WIG20 sits 0.6% higher on the day.
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AUSSIE 10-YEAR TECHS: (U5) Follows Fade in Treasuries
Aug-15 22:15
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 15:17 BST Aug 15
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed both the recent poor NFP print as well as Tuesday’s inflation number. While this impact faded into the close of the week, 10-year futures remain toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
FOREX: USD Index Pinned to 50-dma as Putin Shakes Hands with Trump
Aug-15 20:49
- USD slipped against all others Friday, with a poor set of retail sales and Uni of Michigan sentiment numbers meeting a higher-than-expected import price index to further stimulate concerns over a stagflarionary phase in the US economy. The USD Index trades either side of the 50-dma which, notably, has begun to flatten out after maintaining a solid downtrend throughout 2025.
- JPY is the strongest currency in G10, extending the breakout and bearish conclusion of the consolidation phase in USD/JPY. Recent weakness puts the price through support drawn off the early August lows as well as 146.71, a key retracement. Price action this week marks a full reversal of the previously overbought condition, keeping the downside argument in focus.
- Anticipation ahead of the Putin-Trump meeting has reached fever pitch. Footage showing the Presidents shaking hands in Alaska has helped ease concerns over a hostile meeting, but it's the outcomes that will matter to markets - particularly as equities hold at alltime highs. Any signs of progress toward a ceasefire would be warmly received by risk sentiment - although both Trump and Putin cautioned against a optimistic outcome in comments to press.
- We noted earlier in the week the pressure building on USD/HKD, with price action not matching the pattern of HKMA intervention. That move extended overnight, and is still building at typing, putting spot down to new pullback lows of 7.8119 shortly after the European open. Overnight swap rates have surged further still Friday (hitting 1.7% at typing), well ahead of the 0.3% prevailing rate mid-week and should continue to support a recovery in HIBOR fixes ahead. Today's 1m HIBOR fixed higher by 41bps, hitting 1.45% for the highest fix since mid-May. It's these factors that should work against the HKD carry trade (selling HKD, buying USD), evident in the further tightening of the HKD forward discount today: down 975 points from as high as 1270 this month.
- Focus in the coming week shifts to Jackson Hole and Powell's comments on Friday. With the September meeting still in flux - any conviction toward tipping the board toward a rate cut at the next FOMC will be carefully watched, but it's a hawkish outturn that could be more consequential for markets, as OIS prices a near 90% chance of easing on September 17th.
MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
Aug-15 20:00
- MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
- US TSY TICS NET L-T FLOWS IN JUN +$150.8B
