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2020/07/20 / Erste Group Research

Poland Weekly Focus | Real economy data for June

Retail sales should continue to recover in June. Positive surprise would add to optimism after publication of industrial output data. National Bank of Poland to hold second QE auction this month. Markets to follow global news and outcome of EU summit.

July 21 | Will retail sector surprise to upside in June? After better than expected industrial production data for June, another positive surprise from the retail sector cannot be ruled out. We expect retail sales to continue to recover, but at a slower pace compared to May and land at -4.7% y/y. A positive surprise in retail sales data would increase our optimism regarding the performance of the Polish economy in 2Q20.

July 23 | Unemployment rate to increase marginally. According to preliminary estimates from the Ministry of Family, Labor and Social Policy, the unemployment rate increased only marginally in June to 6.1%, from 6.0% in May. In our view, the increase might be slightly bigger, and we see the unemployment rate at 6.2% in June.

July 24 | NBP to hold QE auction. The National Bank of Poland is scheduled to hold a second QE auction this month. This will be the 11th QE operation held by the NBP since the beginning of the program. So far, the central bank has bought PLN 101.3bn (PLN 51.6bn in Treasuries and PLN 49.7bn in state guaranteed papers). The volume of QEU reached 4.5% of GDP.

Bond market drivers | 10Y yield remains locked below 1.4%. Over the course of the week, downward pressure on the long end of the LCY curve continued. The 10Y yield dropped by almost 10bp toward 1.3% from the peak reached on Monday, mirroring the core market developments. As a result, the spread over the 10Y German Bund remained broadly unchanged around 180bp. This week, the MinFin will hold a regular bound auction. According to preliminary information, they plan to sell PLN 3-6bn. A positive outcome of the EU summit regarding the recovery fund would be supportive for LCY yields.
FX market drivers | EURPLN fluctuates around 4.48. The zloty remains locked in a narrow range of 4.46-4.48 vs. the EUR and closely follows changes in the global risk on/off mood related to coronavirus developments and renewed US-China tensions. This week, the results of the EU summit and flash PMIs for July will be the key events that could influence the EURUSD and EURPLN development. We continue to see the zloty focusing on global factors.

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General information

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


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