Zloty Leads EMEA Lower

The Polish zloty is the weakest of the central and east European currencies today. News that the cental bank had considered hiking rates 50 bp at its last meeting, but decided to leave rates steady last month at the record low 3.5%, has spooked the Polish bond market and this in turn is weighing on the stock market, pushing it down from five month highs.

The zloty is off by nearly 1% against the dollar, but all the currencies in the region, with the possible exception of the Russian ruble, are losing ground today. The bulk of which reflects the euro's slide. News that Poland is also delaying the sale of Grupa Lotos may have also weighed on the zloty.

The recent string of euro zone data, including the unexpectedly large contraction in Ireland's Q2 GDP (-1.2%), weak industrial orders data yesterday, followed by the disappointing flash PMI data today has negative implications for not only the euro zone, but eastern and central Europe, which is increasingly integrated with the euro zone.