EM Preview for the Week Ahead

Concerns about the coronavirus are likely to keep EM under pressure, as the ultimate impact is still unknown.  Global growth was already at risk before the virus hit and now the outlook is even cloudier. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

Risk-off sentiment intensified last week.  Near-term, we think EM is likely to remain under pressure until the full impact of the coronavirus is better known.  On top of this, there is broad-based dollar strength.  Besides the safe haven flows, the US outlook remains very strong.  Taken in conjunction with the recent weak data out of Germany, France, and Japan, it’s clear that the US economy continues to outperform.  Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

EM remains vulnerable to deteriorating risk sentiment as the coronavirus spreads.  China announced a series of measures over the weekend to help support its financial markets, but this may not be enough to turn sentiment around yet.  China markets reopen Monday after the extended Lunar New Year holiday and it won’t be pretty.  Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

The spread of the coronavirus continues and is likely to weigh on risk assets and EM.  Most markets in Emerging Asia are closed for all or part of this week due to the Lunar New Year holiday.  China has extended the holiday until February 2 as it struggles to contain the virus.  The Asian region is just starting to recover from the global trade tensions, and now it must cope with what is likely to be a sharp drop-off in tourism.  Policymakers in the region may have to tilt more dovish this year if the economic impact becomes significant. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

Market sentiment on EM remains positive after the Phase One trade deal was signed.  Data out of China is also supportive for EM.  Key forward-looking data this week are Taiwan export orders and Korea trade data for the first 20 days of January.  The global liquidity story also remains beneficial for risk, with the ECB, Norges Bank, BOC, and BOJ all set to maintain steady rates this week. Continue reading “EM Preview for the Week Ahead”

Some Thoughts on the Latest Treasury FX Report

The US Treasury’s latest “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” report no longer considers China a currency manipulator. The underlying message is that the Trump administration will continue to use an ad hoc “carrot and stick” approach to improve US access to the domestic markets of its major trading partners. This suggests there will still be many minor trade skirmishes this year. Continue reading “Some Thoughts on the Latest Treasury FX Report”

EM Preview for the Week Ahead

EM has been able to get some traction as markets basically shrugged off the risk-off sentiment after the Iran attacks.  This week’s planned signing of the Phase One trade deal should help boost EM further, but we remain cautious.  The Iran situation is by no means solved, and we see periodic bouts of risk-off sentiment coming from smaller skirmishes.  The World Bank also sounded a warning bell last week with its downward revisions to its global growth forecasts. Continue reading “EM Preview for the Week Ahead”