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EM currencies are on the edge as...>

EMERGING MARKETS
EMERGING MARKETS: EM currencies are on the edge as US 10y Tsys prepare for a
retest of 3.00%. Further to our Bullet of 26/04, the JPM EM Currency index has
broken its two-year uptrend at 68.015, now testing the Nov 2017 low.
- Among other key moves, the Brazilian Real broke lower today to a 22-month low
through the key Brl3.51 level vs USD, setting up a move to the Brl3.60s. South
African Rand broke lower yesterday to a four-month low (currently Zar12.6040).
- This would be consistent with broader USD strength, particularly against
commodity FX. JPM EM FX 90-day correlation is highest with AUD (0.75), which
bodes ill for Aussie amid a break of the 0.7500 level, bad seasonals, and
narrowing yield differentials.
- Non-commodity EM FX is also looking weak. As noted this morning by our FX
team, the Polish Zloty is 2.9% weaker against the EUR since printing Pln4.1510
(Apr16 low) and despite relatively positive data flow in Poland. Next key level
is Pln4.2924 (May1 high), and next up, Pln4.3179 (50% long-term fibo
4.5064-4.1293). Eur/Pln last Pln4.2781.

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