Talking Points:
• Emerging Market currencies marked a rebound across the board Wednesday, bolstering risk appetite implications
• The Banco de Mexico amplified its fight against exchange rate pressure with a rate hike and FX intervention
• Oil market expectations have a strong measure in certain exchange rates like USDBRL, USDSAR and USDRUB
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Emerging market assets and currencies are at the extreme end of the risk curve, and that makes them particularly good at gauging global trends. Keeping track of how this important group of economies is performing can tell us how investor sentiment and the world GDP will develop. With a tentative rebound for a mix of EM currencies this past week, a number of key fundamental themes look to be in a course of change. Beyond the the leading gauge of risk trends this represents, we further see monetary policy speculation for the US, forecasts for commodity prices and critical flows in global capital. What factors will dictate change in this group and what groupings or individual currencies offer distinct view of commodity prices, Fed policy and exchange rate pressure? We discuss the importance of and signals from emerging market currencies in today's Strategy Video.
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