China turn up the heat, eye........>

EMERGING MARKETS: China turn up the heat, eye countermeasures

-Despite President Trump delaying the next wave of Chinese goods tariffs by a

three months or so, the rhetoric from China showed no sign of easing as a

foreign ministry spokesman stated China must consider countermeasures against

the US. The comments prompted some further weakness in CNH, but this was swiftly

reversed as the offshore currency looks to close higher.

-This reversal also fed well into other EM currencies, with TRY and ZAR both

posting decent gains. Despite the outperformance in ZAR, however, USD/ZAR still

looks bullish, with yesterday's lows still firmly in tact. Any return higher

will initially target 15.4663 before 15.6958. A modest stabilisation in ARS (the

currency remains considerably weaker since Monday) helped support the BRL and

COP, which outperformed modestly.

-Malaysian and Taiwanese Q2 GDP and Turkish industrial production are the

calendar highlights Friday. Asia-Pacific growth figures will likely come under

increased scrutiny after the Hong Kong government cut their 2019 growth forecast

to 0-1% from 2-3% previously.