PLN: Zloty Holds Steady As Market Weighs NBP Outlook

EUR/PLN trades flat at 4.2417 with little of note on the local docket today. From a technical perspective, bulls continue to look for a break above Apr 16/Dec 25 highs of 4.3102/4.3114, while bears keep an eye on May 15/Oct 22 lows of 4.2230/4.2227.

• The next local catalyst of note is flash October CPI, which will be published at 09:00GMT/10:00CET on Friday. Consensus is for an uptick in headline inflation rate to +3.0% Y/Y, although almost as many analysts expect a repeat of September's +2.9% print. Either would leave the rate within the NBP's +/-1pp symmetric tolerance band but above the +2.5% point-target.
• Inflation data will set the scene for next week's monetary policy decision, which will be accompanied by a fresh macroeconomic projection.
  • Ahead of the meeting, mBank summarised declared voting intentions, with six members (Masłowska, Wnorowski, Kotecki, Kochalski, Tyrowicz and Duda) expected to oppose another interest-rate cut.
  • It should be noted that the decision can be made in the course of the closed-door meeting next week and the upcoming inflation data will feed into these deliberations.
  • The 3-month WIBOR/1x4 FRA spread is around 17bp, with analysts divided as to whether the MPC will cut rates next week. By convention, the NBP does not normally move rates at the December meeting.
• POLGBs have softened across the curve, yields sit 2.5-4.6bp above neutral levels. 2-year/10-year spread has tightened relatively sharply this morning amid 2s outperformance.
• The broad-based WIG Index is 0.6% weaker. Blue-chip WIG20 sits 0.4% lower.