PLN: Zloty Holds Onto Gains After Dynamic Rebound This Morning
Jun-29 14:02
EUR/PLN consolidates earlier losses, despite the recovery in greenback crosses in reaction to US data. Today's move negates yesterday's gains, with little in the way of domestic catalysts seen driving the pair on either swing, as the focus remained on external developments. At typing, EUR/PLN trades -311 pips at 4.4465.
- Statistics Poland will release flash June CPI figures tomorrow. Economists in a Bloomberg survey expect headline inflation to have eased to +11.8% Y/Y from +13.0% prior. The median estimate in local PAP newswire's poll is +11.7% Y/Y.
- Local financial news outlets circulated comments from Bank Millennium economists, who said that the current macroeconomic conditions do not justify imminent rate cuts, but it cannot be ruled out that the MPC will lower rates already this autumn if inflation eases below +10% Y/Y.
- Elsewhere, the government sharpened its rhetoric on the EU's migrant relocation plan, with Prime Minister Morawiecki pledging to veto any such mechanism. Poland had earlier announced that it will hold a referendum on the matter, possibly alongside the upcoming parliamentary election.
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STIR: Stronger House Prices Helps Fed Rates Revert Near Friday Levels
May-30 13:58
- Stronger than expected house price growth has helped continue to unwind the earlier softening after spillover from weaker than expected Spanish inflation, leaving implied rates little changed from Friday’s close, led by terminal pricing slightly higher.
- Of note, Fed Funds implied rates are back to pricing more than 50% likelihood of a June hike (+16bps) and fully pricing a July hike (cumulative +26.5bps), with 34bps of cuts from the implied terminal to an effective 5.00% by year-end (i.e. just 8bps of cumulative cuts from current levels) – see table below for broader strip.
EUR: EURNOK test another multi year high
May-30 13:43
- With WTI extending losses, over $2 bucks in over an hour, EURNOK makes another multi year high, highest print since 25/03/20.
- Next psychological target is at 12.000.
Chart source: MNI/Bloomberg
JAPAN: LDP's Kishida & Komeito's Yamaguchi Reaffirm Their Coalition But Tensions Continue To Simmer
May-30 13:35
Japanese Prime Minister and ruling Liberal Democratic Party leader Fumio Kishida and junior coalition party Komeito leader Natsuo Yamaguchi emerged from their regular meeting in the PM's office reaffirming their intention to maintain the governing coalition, despite tensions over the electoral cooperation between the two parties.
- Frictions resurfaced as Komeito said it will not endorse any LDP candidates in Tokyo in the next lower house election, which is not due until 2025 unless Kishida calls a snap poll. Komeito took the decision after the LDP refused to allow Komeito to field its own candidate in Tokyo Constituency no. 28 with the LDP's support.
- Senior officials from both parties held meeting to defuse tensions over the past few days. LDP Secretary General Toshimitsu Motegi told his Komeito counterpart Keiichi Ishii that the largest party is still planning to endorse Komeito candidates in Saitama Constituency no. 14 (where Ishii is planning to run) and Aichi Constituency no. 16.
- Sankei ran an opinion piece noting that the coordination between the LDP and Komeito has become more difficult as several veteran lawmakers have been sidelined or retired. The newspaper reports that the weekly meetings between the two parties are much shorter than before.
- This comes as Komeito is fighting to maintain relevance after disappointing showings in the 2022 upper house election and 2023 local elections, with analysts pointing to its aging electoral base. There has been speculation that the LDP could consider swapping Komeito for a different coalition partner, albeit at this point most see it as unlikely.
