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About two months ago, I wrote an article about how the Polish zloty (PLN) is in a bullish trend against the US dollar. The main argument was that the National Bank of Poland raised rates higher than the Fed, and the gap should be a tailwind for the currency. You can read more here.
Since then, some interesting pieces of economic data have been released in Poland. First, the balance of payments data for May 2023 surprised on the positive side. More precisely, the currency account surplus exceeded the consensus. That is a positive for the currency.
Second, inflation is coming down in Poland – a similar trend as in other European countries and in the United States. Inflation data showed that in June, the inflation net of food and energy prices amounted to 11.1% compared to 11.5% a month earlier.
However, while the disinflation trend is obvious, the headline number is way higher than the central bank’s target. Hence, there is scope for more rate hikes, contrasting with what the Fed might do after the all-but-certain July rate hike.
PLN/USD bullish trend remains intact
Since the last analysis on the PLN/USD published here on Invezz, the exchange rate remained in a bullish trend. Such a trend is characterized by a series of higher highs and higher lows – and the series continues.
However, the market did not yet broke above the pivotal area marked above in black. A daily close above it would mark the break above the previous lower high and bring more buyers as the short squeeze should amplify.
The post Polish zloty outperforms the dollar as the current account surplus exceeds consensus appeared first on Invezz.
