EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX came under renewed pressure last week as US yields rose to new highs for the cycle.  RUB and TRY were the top performers last week, while MXN and COP were the worst.  There are no Fed speakers this week due to the embargo ahead of the May 2 FOMC meeting.  While we see little chance of a hike then, markets are likely to remain nervous. Continue reading

Dollar Tone Improves

Blog icons - FX Outlook dollar

The US dollar’s technical tone improved last week, but it did not break out of recent ranges.  It appears that the continued increase in US interest rates is proving expensive to be short the greenback if there is no downside momentum.  Despite a good start to US earnings and the fact that the S&P 500 finished higher last week, the charts warn of the near-term downside risks. 

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What Has Changed in EM

IconThe Reserve Bank of India is tilting more hawkish.  Tensions on the Korean peninsula are easing.  The Trump administration reversed course on Russia sanctions.  Turkey is heading for early elections.  Raul Castro stepped down as president of Cuba.  Mexico polls show continued gains for Andres Manuel Lopez Obrador. Continue reading

Greenback Narrowly Mixed as Market Awaits Fresh Drivers

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  • BOC held policy steady yesterday but CAD sold off as the statement was dovish
  • Sterling was sold more in response to softer than expected CPI than to the government’s loss in the House of Lords
  • UK reported weak March retail sales today
  • New Zealand’s CPI slowed to 1.1% y/y in Q1 from 1.6% in Q4 17; Australia’s employment report disappointed
  • Poland reported weak March industrial and construction output; Bank Indonesia is expected to keep rates steady at 4.25%

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Greenback Firm, While Soft UK Inflation Drags Sterling from its Perch

Pound money on financial figures balance

  • Sterling hit an air pocket after softer than expected UK CPI; meanwhile, the UK faces another challenge
  • The Bank of Canada is the only major central bank meeting this week and today is the day
  • The ECB meets next week, and today’s downward revision to March CPI can only complicate its communication strategy
  • Japan trade figures were not much of a factor; news from the Trump-Abe meeting was sparse
  • The Fed’s Beige Book is the main US economic event, outside of the continued stream of corporate earnings
  • Malaysia March CPI rose 1.3% y/y; South Africa March CPI rose 3.8% y/y

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From the Securities Lending Trading Desk

Underground mine passage angle shot

The desk has seen demand for the UK Miner Sirius Minerals (SXX LN) last week as the firm made an offer for USD 400 million of convertible bonds. After years of bearish sentiment, Tesla Inc. (TSLA) is once again the most shorted U.S. equity. Meanwhile in Asia, shares of Kingdee International continued to surge in Hong Kong trading as investors bet on the success of its cloud strategy. Continue reading