Euro EUR/PLN above 4.33, EUR/USD rises to 1.1428
Despite the escalation, the currency market remains stable.
EUR/PLN is consolidating at 4.3300.
Further weakening of the zloty is restrained by technical factors and the scale of movement from previous weeks.
EUR/USD, however, slightly rises to 1.1428.
The dollar weakens slightly despite higher geopolitical tension and rising US Treasury yields.
In our view, this indicates limited room for further USD strengthening.
On the core debt markets, the key event of today’s session will be the ECB meeting and President Lagarde’s conference.
In the country, the key event will be the bond sale auction, where the Ministry of Finance will offer bonds of series: OK0129, PS0130, NZ0331, PS0731, DS0436, NZ0936 totaling 9-13 bn PLN.
WIG above 145k points, WIG20 hits new peak
During yesterday’s session on the domestic equity market, the main indices rose (only the mWIG40 fell slightly). The WIG index broke 145k points, reaching a new historical high, while WIG20 hit a new peak in the current rally.
Currency market changes were marginal. EUR/PLN rose to about 4.334 from about 4.326 at open, but later in the day gradually fell back to opening levels.
On the domestic interest rate market, rate hikes continued. IRS rates rose by about 5‑10 bp, with larger increases on the short end of the yield curve and even larger on the long end.
Short‑term swaps reached resistance levels set by local peaks a month ago, and about 10‑15 bp short of the next resistance for short tenors and about 20 bp for longer tenors.
This is due to higher oil prices and sustained market momentum from previous sessions, as well as better‑than‑expected retail sales data for June. By the end of the day, 10‑year bond yields were close to 5.64%.
Europe in the green, US threatens Iran
On European equity markets, after a weak opening, the green dominated later in the day, and by session end index gains were close to 0.6‑1.3%.
The focus of investors remains the Middle East situation.
President Trump announced that the United States will attack an Iranian power plant or bridge for every attack on a ship passing through the Strait.
Oil prices, after opening gains, stayed at stable levels near $93‑95.
EUR/USD remained stable with a slight upward trend to about 1.1415 from about 1.14. On core debt markets, there was a slight weakening, and yield increases were around 2‑3 bp.
By session end, 10‑year Bund and US Treasury yields finished near 3.18% and 4.65% respectively.
