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Favourable conditions for zloty (Afternoon analysis 19.02.2018)

19 Feb 2018 16:18|Bartosz Grejner

A slightly stronger dollar did not hamper the zloty - PLN was strengthening and EUR/PLN dropped to the lowest level in 14 days. Tomorrow's data from Poland may cause more volatility to the zloty.

Stronger zloty

Today, the Polish currency was in better condition due to the absence of some US investors (no session in the US). The zloty was also not disrupted by the strengthening dollar, which often weakens the whole zloty basket. The EUR/USD quotations fell to 1.237 around 3.00 p.m. - the lowest level since last Wednesday. However, due to the globally better zloty condition, the USD/PLN exchange rate was close to 3.35 PLN, which is the level at the end of Friday's quotations.

The higher demand for the zloty resulted in a drop of EUR/PLN quotations near the 4.14 boundary - the lowest level in two weeks. The zloty appreciated by around 0.5% in relation to the pound and the franc. The good zloty condition was also visible in relation to the regional forint as the PLN/HUF exchange rate rose to approx. 75.16, approaching the highest level in 2.5 years.

The positive beginning of the week for the zloty does not necessarily mean that the rest will also be favourable. Tomorrow important data from the Polish economy (more information below) will be released that may increase its volatility. However, the most important events of this week will be the publication of minutes after recent meetings of the Federal Reserve and the European Central Bank (ECB). Around these events, we can expect significant euro and dollar fluctuations, which may affect the valuation of the entire zloty basket.

Tomorrow's preview

At 10.00 a.m., the Polish Central Statistical Office (GUS) will present January's data on industrial production, retail sales and producer inflation (PPI) in Poland. All three indexes turned out to be worse than expected in the previous month. Activity in the production sector decreased from 9.1% to 2.7% per year, retail sales from 10.2% to 6%, and inflation among producers from 1.8% to 0.3%.

The readings above market expectations (8%, 7.3% and 0.1% respectively in the case of production, retail sales, and PPI inflation) could support the zloty. However, no significant changes due to the GUS publication should be expected. The Polish currency will most likely react to external factors, especially market sentiment and the behaviour of the dollar.

At 11.00 a.m., the ZEW will publish a sentiment index for economists for the eurozone and Germany. In both cases, this index is expected to fall to 28,4 and 16 points respectively. There are still good sentiments in the single currency area, and higher than expected readings could slightly strengthen the euro and improve the market sentiment. These are conditions, which may support a relatively high zloty valuation.

19 Feb 2018 16:18|Bartosz Grejner

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

19 Feb 2018 12:36

Stable situation helps zloty (Daily analysis 19.02.2018)

16 Feb 2018 15:51

New highs on EUR/USD (Afternoon analysis 16.02.2018)

16 Feb 2018 13:17

Unstable situation (Daily analysis 16.02.2018)

15 Feb 2018 15:46

Positive zloty's condition (Afternoon analysis 15.02.2018)

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