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EM FX Continues to Trade With Softer Tone Despite Slight Correction in USD

  • EURUSD trades marginally in the green today as greenback momentum wanes following a 0.75% rally in the Dollar Index this week. Nevertheless, Thursday’s move lower in EURUSD marks an extension of the technical bear leg, signalling scope for a continuation lower to 1.0737, a Fibonacci retracement.
  • In EM, HUF is the standout underperformer following yesterday’s 1.5% rally in EUR/HUF. The cross has traded 0.6% higher again today ahead of next Tuesday’s NBH meeting with headlines crossing wires recently that the Bank and Finance Ministry's joint goal is to reduce interest rates.
  • The broader EM space continues to trade with a softer tone despite the slight correction in the dollar and uptick in most regional equities. CZK and ZAR trade in the red against most other currencies in the space while PLN sees only marginal gains against the EUR.
  • Banxico held its key rate unchanged at 11.25% on Thursday. “It will be necessary to maintain the reference rate at its current level for an extended period” in order to bring inflation to the target, the statement read. The full MNI review for the decision will be released later today.
  • Fedpseak from Fed Chair Powell, NY Fed President Williams and Gov. Bowman will cross in what is an otherwise quiet day for data releases. Focus remains on developments regarding the debt ceiling deal, with House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer making plans for votes in the coming days on a bipartisan deal to avert a US debt default.

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