1. FX Outlook
  2. FX Options Weekly

Macro and Vol Commentary

EURPLN continued to trade lower in recent months, extending the downward trend that started in March 2023. Despite recent euro strength, moves on the downside persisted, suggesting that zloty momentum is key to driving the currency pair outlook. The Polish currency was the biggest gainer among emerging-market peers in Q2 2023.  With the parliamentary elections set for October 15, what is the outlook for EURPLN?


  • Following Q1 2023 GDP growth figure of -0.3% YoY, the contraction deepened in Q2 2023 to -0.5%. Still, Poland’s economy is predicted to record above-EU-average growth in 2023.
  • June retail sales data at -4.7% YoY, albeit higher than –6.8% YoY recorded in May, points to a weakening consumer sector. Persistent double-digit inflation has been outstripping wage growth, reducing the Poles’ purchasing power.

  • In July, CPI (Consumer Price Index) was significantly above the Eurozone countries, albeit decreased for the fifth consecutive month with a 10.8% YoY reading compared to 11.5% registered the month before. Monthly, consumer prices edged down by 0.2% in July.
    - It was the softest reading since February 2022 mainly due to a drop in cost of fuels. In July, refuelling at petrol stations was 15.5% cheaper than a year before.
    - While the softening in the prices of food & non-alcoholic beverages also had an impact on the lower CPI reading, the growth rate of food prices remains high at 15.6% YoY as persistently high production costs continue to be passed on to consumers.
    - Given this dynamic, while the CPI might continue to soften month-on-month, we do not expect it to decrease to Eurozone levels in the short term.

  • The most recent PPI (Producer Price Index) figure of 0.5% points to the lowest producer inflation rate since December 2020.
    - While costs remain elevated, decreasing energy prices and eased supply chain bottlenecks lead PPI to soften.

  • Unemployment has remained low in recent months and stood at 5% YoY in June compared to 5.1% YoY in the previous month.
    - While wage growth softened in June to 11.9% YoY from 12.2%YoY in May, it was the first month when wage growth caught up with inflation. Increasing disposable income raises hopes for more activity in the consumer sector.
    - At the same time, weakening economic activity weighs on job openings. The number of jobs posted decreased in June compared to a year earlier with the IT sector indicating the biggest declines.

  • While still in contractionary territory, the fall in industrial output softened in June with a reading of -1.4% YoY compared to -2.8% in May.
    - The negative reading was mainly driven by a fall in mining and quarrying production.
    - Construction output grew at 1.5% YoY in June, compared to -0.7% in May.

  • In line with other European countries, manufacturing PMI continues the downward trend in Poland.
    - In July, factory activity reached 43.5, down from 45.1 the prior month. It was the slowest manufacturing growth since October 2022, as weakening internal and external demand weighs on industrial production.
    - Production volumes, new orders, employment and purchasing activity fell faster in July than in June.

National Bank of Poland (NBP)

At their latest meeting in July, the policymakers kept the interest rate unchanged for the 10th consecutive time since September 2022 when the interest rate was increased to 6.75%.

The central bank chief announced the end of monetary tightening and stated that a 25bps cut might materialise in September if CPI figures continue to show signs of softening.

NBP decision contrasts with the relatively hawkish stance of the ECB, whose chair Christine Lagarde recently indicated some more rate hikes may be needed to bring inflation to the target 2%.

While there has been rumours about the government backing the currency’s advance, Poland’s Finance Minister rejects the claims stating that the recent appreciation of the PLN was the result of the currency getting back to the levels from before the war. PLN depreciated significantly in March 2023 when investors turned away from the risky currency of the Ukrainian neighbour.


Polish parliamentary election is set for October 15. As of today, polls show that the populist ruling party PiS (Law and Justice) maintains a narrow lead over the largest opposition party.

At the end of August, EURPLN tested 4.40 level not seen since August 2020 despite central banks’ divergence regarding monetary policy. It has appreciated slightly and approaches 4.50 level as of 18 August. If ECB and NBP take a different path in September, the former increasing interest rates further and the latter implementing a cut, we could see further depreciation of PLN against EUR. We expected to see a period of elevated volatility closer to the election date with risks skewed to the downside when it comes to the PLN strength against the euro.

Sources: S&P Global, Polish Statistics Office

EURPLN Trade Idea

Due to the recent range bound price action of EURPLN as well as the high implied volatility for the 2m expiry. We suggest to buy the wings in case of a sudden jump in volatility due to the Polish parliamentary elections. At the same time, we will sell an ATM call to pick up premium for the elevated implied volatility levels for the 2m expiry.

BUY EURPLN Put strike 4.4

SELL EURPLN Call strike 4.47

BUY EURPLN Call strike 4.5

Expiry 16/10/2023

Notional in 5mio EUR

This structure receives circa. 15.5k EUR 

Charts and Tables

Historical Spot FX Volatility (30D Rolling)

Hist Spot Fx Vol


Key Events & Releases




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