EM FX ended Friday on a weak note, and extended the slide. For the week as a whole, the best EM performers were PHP, TWD, and SGD while the worst were ARS, ZAR, and TRY. With US rates continuing to move higher, we believe selling pressures on EM FX will remain in play this week. Our recently updated EM Vulnerability Table supports our view that divergences within EM will remain. Continue reading
The US dollar impressive recover over the last few months is continuing and pullbacks are brief and shallow. Rising US rates and policy divergence have made it increasingly expensive to be short dollars. Yet positioning adjustments seem to trail behind the price action.