Back
17 Mar 2015
Bearish EM space vs. the greenback – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan argued the outlook on the EM space would remain negative vs. the US dollar.
Key Quotes
“We keep a bearish bias on EM currencies as a strong broad dollar and idiosyncratic drivers suggest continuation of the recent weakening trend”.
“In a volatile week for FX overall, with the euro hitting new lows, all EM currencies with the exception of CNY were lower versus the dollar, but most were stronger actually versus the euro”.
“Currencies which are more highly managed (CNY, HKD, PEN) were the outperformers, while the introduction of another leg of intervention in Mexico supported MXN”.
“In Latin America, the hawkish shift in Mexico should slow the pace of MXN weakness and support relative outperformance in the region, but we see scope for long USD positioning to increase into Fed hiking using previous episodes as a guide”.
“Meanwhile, BRL continues to be the underperformer among global FX due to Brazil specific issues, namely increased credit risk and lack of a policy backstop”.
Key Quotes
“We keep a bearish bias on EM currencies as a strong broad dollar and idiosyncratic drivers suggest continuation of the recent weakening trend”.
“In a volatile week for FX overall, with the euro hitting new lows, all EM currencies with the exception of CNY were lower versus the dollar, but most were stronger actually versus the euro”.
“Currencies which are more highly managed (CNY, HKD, PEN) were the outperformers, while the introduction of another leg of intervention in Mexico supported MXN”.
“In Latin America, the hawkish shift in Mexico should slow the pace of MXN weakness and support relative outperformance in the region, but we see scope for long USD positioning to increase into Fed hiking using previous episodes as a guide”.
“Meanwhile, BRL continues to be the underperformer among global FX due to Brazil specific issues, namely increased credit risk and lack of a policy backstop”.