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USD/PLN Consolidates on Wavering U.S. Outlook & NBP CPI Data

USD/PLN Consolidates on Wavering U.S. Outlook & NBP CPI Data

Walker England, Kara Dailey,

Talking Points

  • Core inflation net of food and energy increased 0.2%, post 50 bps rate cut
  • 10 year U.S. Treasury Yields decline 0.3% as does September retail sales
  • USD/PLN consolidates, look for next directional breakout

A generally favorable NBP CPI release paired with a wavering U.S. economic outlook has led the USD/PLN to consolidate, leaving traders to look for the next directional breakout.

Last week, in response to slow economic growth domestically and internationally, the MPC elected to cut the NBP rate by 50 bps to raise low inflation figures. Today’s CPI release provides a small indication that the economy may be responding positively to the policy change. While CPI remained at August’s -0.3%, core inflation net of food and energy increased by 0.2% to register 0.7% YoY. The latter figure is closely watched by the NBP when assessing the effectiveness of monetary policy as it excludes goods priced by external or global conditions and is instead inclusive of those domestically priced.

Meanwhile the U.S. outlook has shifted as a recent equities sell off has led investors to expect the Federal Reserve to wait longer before increasing short term interest rates. Speculation centers on a late 3rd quarter increase or perhaps even a move as late as the 4th. On Wednesday the Dow Jones fell 173.45 points as investors transferred their resources into safe haven government bonds. The movement drove prices up creating the largest one day 10 Year U.S. Treasury yield decline since 2009 (-0.3%). The uncertain sentiment regarding economic recovery continues as today’s September retail sales disappoint with a 0.3% decline.

Daily USD/PLN Chart

dailyfx USDPLN Daily Chart.

Chart Created by Walker England Using MarketScope 2.0

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.