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2019/06/11 / Erste Group Research

Weekly Focus Poland

Macro releases this week most likely to have limited impact on bond and FX market. Trade balance expected to decline, while flash CPI to be confirmed at 2.3% y/y in May. In our view, long end of curve should stabilize. Zloty to remain under global sentiment and we see limited potential for further appreciation.

June 13: Trade balance to decline in April. The market expects the trade balance to worsen in April and decline to below EUR 500mn. Export and import volumes are expected to decline, although the drop in exports is likely to be stronger.

June 14: Flash CPI to be confirmed at 2.3% y/y. We expect that the flash reading of inflation will be confirmed at 2.3% y/y in May. We think that, after a strong pick-up in the headline figure in April (1.1% m/m), growth dynamics will stabilize in the coming months. We expect inflation to peak at the turn of the year and it could go above the upper bound of the inflation target.

Bond market drivers: Polish 10Y yields went below 2.5%. Since the end of May, the long end of the curve went down by almost 40bp. 10Y yields bottomed out at the end of last week and reached 2.45%, which is the lowest level since mid-2015. Recently, a correction has been observed, as yields went slightly above 2.5%.

FX market drivers: Zloty went visibly below 4.30 vs. EUR. Over the course of the week, the zloty followed regional developments and appreciated, supported by the weaker US dollar. The EURPLN went down to 4.26, which is the strongest level since August 2018. We expect the zloty to weaken and go above 4.30 vs. the EUR in 2H19, due to higher overall risk for the EU.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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