PLN: Zloty Tad Weaker, NBP Consensus Under Scrutiny
Dec-11 10:24
EUR/PLN has moved away from recent lows, adding 39 pips this morning to last trade at 4.2628. Bulls need more sigifnicant gains beyond the 20-EMA (4.2934) to find the initial foothold. Bears look for a decisive break below the psychologically significant 4.25 area.
- Finance Minister Domanski flagged "some communication problems with the central bank" and said that interest-rate cuts would stimulate investments. Separately, MPC's Kotecki accused Governor Glapinski of issuing forward guidance which was incongruent with the conclusions of the debate at the latest MPC meeting. He also accused the Governor of breaching a "gentlemen's agreement" to initiate a "strategic" discussion on cutting interest rates in March 2025.
- POLGB curve has steepened, with yield last seen -0.3bpto +2.0bp. Poland will offer PLN4bn-7bn OK0127, WS0429, PS0130, WZ0330, DS1034 and IZ0836 bonds at an auction today.
- The WIG20 Index (-0.6%) has come under pressure, moving away from recent multi-week highs. The index remains in the red on an YtD basis.
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FOREX: EURGBP Posts Lowest Weekly Close Since April 2022
Nov-11 10:20
- A cluster of daily lows surrounding the 0.8300 handle had continued to highlight the ongoing and building significance of this medium-term inflection point for EURGBP. The firm reversal from post-budget highs resulted in the cross posting its lowest weekly close since April 2022 on Friday.
- Weakness has extended today, and notably EURGBP has now cleared the bear trigger at 0.8295, the Oct 18 low. Moving average studies are in a bear-mode position, highlighting a dominant downtrend and the ongoing Eurozone growth concerns and brewing political crisis in Germany provide additional weight to the cross.
- Furthermore, GBP’s positive beta to global risk sentiment and the outperformance for US equities will likely bolster EURGBP downside. Goldman Sachs see scope for continued GBP outperformance on crosses over time, particularly versus the Euro, even with EURGBP already back at two-year lows.
- Initial targets include 0.8250, the Apr 14 ’22 low and below here another major support resides at 0.8203, the Mar 7 ‘22 low.
- Tomorrow’s UK labour market data remains in focus despite the MPC noting that it favours a “gradual” cutting cycle. Elsewhere, we will hear from BoE Governor Bailey & Chancellor Reeves as noted in our previous posts.
EURIBOR: EURIBOR FIX - 11/11/24
Nov-11 10:09
EURIBOR FIX - EMMII/Bloomberg.
- EUR001W 3.1480 0.0130
- EUR001M 3.0800 -0.0070
- EUR003M 3.0400 0.0080
- EUR006M 2.8310 0.0090
- EUR012M 2.5280 -0.0060
BOE: Upcoming MPC speakers (2/2)
Nov-11 10:07
- Catherine Mann will also speak twice this week: a panelist at the BNP Paribas Global Markets Conference on Wednesday followed by a speech at the SPE Annual Conference (Society of Professional Economists) with the text due to be released for the latter. Mann is clearly the most hawkish member of the MPC now, and was the only member to dissent last week in favour of keeping Bank Rate on hold. Her comments are therefore unlikely to move markets too much but are still important to listen to.
- Looking ahead to next week, Deputy Governor Ramsden will deliver a speech on monetary policy (on Wednesday after October CPI has been released). He has previously been a dovish dissenter – but voted to maintain Bank Rate on hold in September. We suspect that he sees risks skewed more towards case 1 than case 3 i.e. that he still leans dovishly. If the market continues to price in less than 3 cuts fully in 2025 and he delivers a dovish speech there is potential for a decent market move here.
