Adam Narczewski
Independent Analyst
Not much has changed on the PLN markets since last week despite the publication of some important global and local news. The published FOMC minutes suggest that the Fed will continue to increase interest rates gradually. The reaction to this was seen on the 10y Treasury bonds market, where yields grew to over 3.2%. Also, the USD kept appreciating, reaching levels below 1.15. On the local market, we had plenty of macro publications for September. The CPI index (yearly basis) came out at 1.9% (lower than the previous reading) while Core CPI dropped to 0.8% (both lower than data for August). Average wages increased by 6.7% showing that salaries are stabilizing in Poland. The PPI index (yearly basis) declined to 2.9% while industrial production grew by only 2.8%. All these data is certainly not pro-inflationary. Maybe that explains the comments made by Jerzy Zyzynski, member of the MPC. He agrees with Glapinski (MPC's Governor) that there is no necessity for hiking interest rates in Poland. Mr. Zyzynski sees even some evidence that they could be reduced. In his opinion, higher interest rates would make sense, if the demand for credit suddenly increases. Also, the ECB hiking interest rates would be good for the economy, as it would decrease the disparity of interest rates between Poland and the Euro zone. So again, we should not expect any moves from the MPC any time soon.
As we see on the weekly chart, nothing has changed on the EUR/PLN market since last week. The PLN is traded at around 4.30 against the Euro and only breaking the resistance of 4.32 (then the target will be 4.36) or support of 4.27 (target at 4.22) would trigger a major move.
Pic. 1 EUR/PLN W1 Source: Meta Trader 4 Supreme Edition. Admiral Markets.
On the USD/PLN chart we see a slightly different situation. The appreciating USD is pushing the market up and it is heading towards the 3.80 resistance. There is a high chance it will be tested next week. If broken, the market could target 3.90.
Pic. 2 USD/PLN W1 Source: Meta Trader 4 Supreme Edition. Admiral Markets.
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