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2019/06/17 / Erste Group Research

Weekly Focus Poland

This week, labor market and industrial production data for May will be released. We expect wage growth to remain even at around 7% y/y, while employment growth is to arrive at 2.9% y/y. A positive calendar effect and strong manufacturing sentiment could support industrial output growth. We see industry expanding 6.2% y/y in May. The FOMC meeting on Wednesday should shape developments on the bond and FX market this week. Lower liquidity due to a public holiday could add further pressure on yields and the zloty.

Bond market drivers: Polish 10Y yields under global pressure. After a short-lived recovery in the first half of the week, 10Y yields went down by roughly 10bp and dropped visibly below 2.4%. Polish yields followed global developments, as both US Treasuries and Bunds went down last week. As a result, the spread vs. the 10Y Bund narrowed to 265bp and stands well below the 1Y average. This week promises to be quite eventful, with the FOMC meeting taking place on Wednesday.

FX market drivers: Zloty holds strong vs. EUR. Over the course of the week, the zloty remained on the stronger side of 4.30 vs. the EUR and closed the week at around 4.26, which is the highest level since mid-2018. The upcoming FOMC meeting will most likely add volatility to the EURUSD development and could impact the zloty as well.

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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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