U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Oil Prices Slide as U.S.-Iran Deal and Hormuz Reopening Ease Supply Concerns 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
Trump Questions USMCA Renewal as Trade Talks Continue 
Goldman Sachs Sees U.S. Dollar Holding Firm as Strong Economic Data Supports Outlook 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Urban studies: Doing research when every city is different 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
J.P. Morgan Sees Major Upside for Prysmian as Optical Fiber Prices Surge 
Gold Price Rises as Investors Weigh U.S.-Iran Talks and Fed Policy Outlook 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Europe EV Demand Surges as Fuel Prices Rise Amid Iran Conflict 
Asian Currencies Stabilize as Dollar Holds Near Two-Month High After Fed Hawkish Signal 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Russian Stocks End Flat as MOEX Index Hits New 52-Week Low 
The above diagram explains 1m implied volatility with a forward start of 15 April (i.e. just before the commencement of French presidential elections) for a number of currency pairs.
While G7 currency pairs, including EURUSD, EURJPY, and EURCHF have been moving higher in anticipation of French election risks, EURPLN and EURHUF implied volatility has been grinding lower.
We are modestly bearish PLN against EUR over the medium term. The zloty is currently around fair value, but with a little premium for risks from the potential conversion of FX mortgages and foreign divestment from the banking sector. While growth has been robust lately, the market already prices in more rate hikes than JPM's economists over the next 2 years and thus further support from expectations of tightening monetary policy is limited from current levels.
Polish full-year 2016 growth was reported at 2.8% y/y last week, from which we infer that growth was broadly stable at 2.5%oya in 4Q. This would nonetheless imply a strong pickup in sequential growth to 4.5%-5%q/q, saar from 0.8% in 3Q16. IP and construction output expanded robustly in 4Q16 (6.9% q/q, saar and 18.5%, respectively) while retail sales also rebounded (12.7%). The expenditure-side details available for full-year 2016 suggest that private consumption remained solid, expanding around 4%oya in 4Q, while the contraction in fixed investment eased only marginally.
Initiate longs in a new EURPLN 2m call (4.35), spot ref: 4.3090.
We think it is, therefore, attractive to buy EURPLN call options at current levels, as CEE is vulnerable to contagion from political anxiety in Europe.
EURPLN is close to fair value on our valuation models, and we think the zloty will struggle to rally from current levels.
