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2019/07/29 / Erste Group Research

Weekly Focus Poland

This week, markets to focus on global releases and rate decision by FOMC. First estimate of July inflation and 2Q19 GDP growth in Eurozone should be carefully observed. In Poland, flash estimate of inflation for July to be published. We expect it to land at 2.6% y/y due to stabilization of food price growth and still relatively low oil prices. Local yields to follow core market development, while zloty should remain stable around recent levels.

July 31: CPI inflation to stabilize. We expect the flash reading of headline inflation to land at 2.6% y/y (-0.1% m/m) in June. In our view, food prices should stabilize around recently observed levels of 5%, while oil prices remaining relatively low should be a limiting factor to inflation as well.

August 1: PMI to drop further. The market expects that the PMI for July will decrease to 48 from the 48.4 observed in the previous month; such a move would be in line with the drop observed in Germany (flash manufacturing PMI for July went down to 43.1).

Bond market drivers: Polish 10Y yields recovered after ECB meeting. Last week, the ECB meeting was the key driver of the FI market in Europe and Poland. Ahead of the decision and press conference of the ECB’s Governing Council, the 10Y Polish yield slid down by 20bp to 1.96%. As some of the market expectations for monetary easing could have been dampened during the press conference, the 10Y German Bund recovered somewhat toward the end of the week. As did 10Y Polish yields that increased by almost 15bp and closed the week around 2.1%.

FX market drivers: Zloty slightly weaker vs. EUR. Ahead of the ECB meeting, the zloty was rather stable and moved around 4.25 vs. the EUR. The expected rate cut by the FOMC is already priced in by the markets, hence we expect that the volatility on the FX market ahead of the decision will most likely be limited. We expect the EURPLN to remain around 4.27 in the short-term.

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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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