Zloty could weaken to EUR/PLN 4.185 after poor macro data, T-bonds put off gains for next week
The Polish zloty suffered from the disappointing macro data publication on Friday and could weaken to EUR/PLN 4.1850 on Monday, while T-bonds reacted only mildly to the data but may sport more gains next week as investors take in the full picture, locals told PAP.
"Industrial output data [release] was the key moment which influenced the zloty's direction on Friday and possibly for the next few days . . .," Bank Millennium FX dealer Przemyslaw Winiarczyk told PAP. "The move was decisive, activity of London banks was apparent."
The zloty may slide further, if the situation does not change, according to the dealer.
"The move is dynamic, we may reach November peak of EUR/PLN 4.1850 already on Monday," Winiarczyk expects.
Poland's industrial output decreased by 10.6% y/y in December vs. a 6.4% y/y decrease expected, on a monthly slump of 14.2%, the stats office GUS announced. Polish PPI inflation measured a negative 1.1% y/y in December vs. -0.6% expected, with producer prices down by 0.6% m/m.
T-bonds reacted mildly to the macro data but may strengthen next week, BPH bond trader Piotr Zoltowski told PAP.
"Paradoxically, after the data themselves there was no greater reaction," Zoltowski said. "A pre-emptive move was made on Thursday and on Friday before the data publication. Yields were falling . . . on expectations that the data turn out to be below the consensus."
But yields may continue to fall next week in the aftermath of the entire week's data and Monetary Policy Council (MPC) members' comments, according to the trader.
"After such a large set of data and MPC members' comments suggesting a cut in February I would personally expect a larger move than what we've seen so far," Zoltowski said. "Perhaps some investors have already done quick profit-taking, while others refrained from opening long positions before the weekend. That's why the market may grow further next week."