PLN: Zloty Extends Weekly Gain, Eyes NBP MonPol Meeting
EUR/PLN falters for the fourth consecutive day and last sits at 4.2554, down 29 pips on the day. The pair operates within the confines of a well-defined trading range. A break below 4.2230, which limited losses on May 15, would suggest that bearish momentum is picking up. Bulls look for a rebound towards Apr 16/Dec 25 highs of 4.3102/4.3114.
- The WIG Index is up by 0.6%; blue-chip WIG20 is also 0.6% firmer. The WIGBANK Index posted decent gains over the past couple of days after Business Insider reported that the US may exert political pressure to block the implementation of a higher corporate-tax rate for banks.
- POLGB yields are barely changed across the curve. The Finance Ministry looks to sell PLN2bn-4bn worth of T-bills today. 2-year/10-year spread has edged away from recent cyclical wides (123bp) but remains very close to these levels.
- There is little of note on the local data docket until next week's monetary policy meeting. Analysts are divided on whether the NBP will deliver another 25bp rate cut already in October, with a majority leaning towards a hold.
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FOREX: FX OPTION EXPIRY
Of note:
EURUSD 2bn at 1.1680/1.1700 (a little far).
EURUSD 2.11bn at 1.1600 (thu).
EURUSD 2.05bn at 1.1600 (fri).
AUDUSD 1.08bn at 0.6500 (fri).
- EURUSD: 1.1600 (942mln), 1.1625 (524mln), 1.1650 (746mln), 1.1680 (948mln), 1.1700 (1.06bn).
- GBPUSD: 1.3350 (326mln).
- USDJPY: 148.00 (624mln), 148.50 (566mln), 149.00 (508mln).
- AUDUSD: 0.6475 (570mln).
- USDZAR: 17.8500 (380mln).
EGBS: UniCredit Underscore Need For Ongoing Issuance To Boost EU Bond Demand
UniCredit write “investor demand for EU bonds has proven healthy so far this year but does not seem to have been sufficient to convince markets to ask for their inclusion in sovereign bond indices. Investors remain concerned that issuance activity by the EU will drop after the NGEU program is phased out after next year”.
- In their view, “common funding will be more frequent than it was before the pandemic, as the EU will want to capitalise on the success of the NGEU program and to address issues that require common action, such as defence, competitiveness and environmental goals. The recent launch of a new defence program, Security Action for Europe (SAFE), the funding of which could require up to EUR150bn, is a good example in this respect. More frequent issuance activity would enhance EU bond liquidity and would encourage demand from investors looking for higher yields than those offered by Bunds or seeking less idiosyncratic risk than that associated with OATs”.
MNI: UK AUG SERV PMI 54.2 (53.6 FLASH, 51.8 JUL)
- MNI: UK AUG SERV PMI 54.2 (53.6 FLASH, 51.8 JUL)
