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Forex: Is There Enough Emerging Market Fear over Russia to Rally the USD?

By , Chief Currency Strategist
04 March 2014 02:42 GMT

Talking Points:

• Once again Emerging Markets threaten to disrupt global risk trends and stoke demand for havens like USD

• Key to setting off a new S&P 500, Yen cross, EM or Dollar trend is the scope of speculative fear

• Where risk trends are the key theme, the Aussie dollar will be top currency for volatility

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Emerging Markets have once again taken the reins on global investor sentiment. A growing spat between Russia and the Western world over Ukraine has sent world equities tumbling. Yet, this 'risk' move hasn't set speculative positioning on fire just yet. We haven't seen the yen crosses collapse under carry unwind. Fear of disorderly markets has so far leveraged limited gains for volatility measures or the US Dollar as a favored safe haven. Not even the broader Emerging Market measures are suffering uniformly to this threat. When fear infects the system, market conditions and technical positioning may ensure painful systemic shock. Yet, the initial hurdle for that drive is still high. We discuss whether current fundamental concerns are prolific enough to set the fire along with upcoming event risk in today's Trading Video.

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04 March 2014 02:42 GMT