PLN: Zloty Edges Higher Amid Dollar Weakness
EUR/PLN has slipped and last trades at 4.2727, down 70 pips on the session. Liquidity might be lower with many market participants taking a day off for the long weekend. Bears set their sights on the 100-DMA/Apr 9 low of 4.2251/4.2231, while bulls keep an eye on Apr 16/Dec 25 highs of 4.3102/4.3114.
- There is solid consensus that data released since the previous NBP monetary policy meeting provide sufficient grounds for a 50bp rate cut next week, which would be consistent with guidance from Governor Adam Glapinski. Our summary of latest comments from Polish policymakers suggests that there is a clear majority in favour of a cut in May.
- Poland's S&P Global Manufacturing PMI deteriorated to 50.2 in April (versus 50.3 expected) but stayed above the breakeven 50 level, with accompanying commentary noting that 'the nascent recovery in the Polish manufacturing sector was under threat in April despite faster growth in output and a renewed rise in employment.'
- POLGBs are a tad weaker across the curve. The WIG Index is 1.8% firmer; WIG20 is up by 1.6%.
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GERMAN AUCTION PREVIEW: 2.50% Feb-35 Bund
This morning, Germany will hold its sixth 10-year Bund auction of the year. On offer will be E4.5bln of the 2.50% Feb-35 Bund.
- The size is in line with the last re-open of the 2.50% Feb-35 Bund on March 12.
- Recent auctions in the German 10y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 4.87x range since July), bid-to-offers (1.52x to 3.98x range since July) and the low prices above the secondary market mid-prices throughout 2024/5.
- For the last 2.50% Feb-35 Bund auction on March 12, the bid-to-cover stood at 2.12x, while the bid-to-offer came in at 1.62x.
- The next German auction will be E2bln of a (yet unspecified) Green line on April 8, while the 2.50% Feb-35 Bund will be reopened next on April 23, for E4.0bln.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
EQUITIES: Estoxx outright call seller
SX5E (20th June) 5300c, sold at 127.60 in 6.5k vs 2.86k at 5225.00.
COMMODITIES: Gold Trend Remains Bullish Following Sequence of Record Highs
WTI futures traded sharply higher Monday. This undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term. The rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme. On the downside, initial firm support to watch lies at $69.01, the 20-day EMA. A breach of this level would signal a potential reversal. The trend condition in Gold is unchanged, it remains bullish. The latest rally reinforces current conditions and confirms a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a Fibonacci projection. Support to watch lies at $3004.9, the 20-day EMA. A pullback would be considered corrective.
- WTI Crude down $0.2 or -0.28% at $71.09
- Natural Gas up $0.02 or +0.48% at $3.967
- Gold spot up $20.3 or +0.65% at $3133.08
- Copper up $3.7 or +0.73% at $505.7
- Silver up $0.31 or +0.93% at $34.0041
- Platinum down $6.15 or -0.62% at $985.32
