EM FX: EMEA Currencies Trim Losses, Focus Shifts to ECB Presser

EMEA currencies staged a recovery ahead of the ECB rate decision, with EURHUF and EURPLN erasing earlier gains and dipping into negative territory. The rate decision itself prompted only moderate market reaction for the euro, while US IJC and PPI figures have done little to move the needle so far.

• The rand is still the worst regional performer today, but its losses against the greenback have been trimmed to a more moderate 0.15%. Comments from the DA leader played down concerns of any potential threat to the GNU over the party's opposition to the Basic Education Laws Amendment Bill. This could be providing additional impetus to the rand’s recovery.
• USDMXN was unfazed to both the ECB decision and the US data. The pair remains 0.35% lower on the session.
• For the ECB, the 25bp cut to the deposit rate and narrowing of the corridor was in-line with unanimous expectations. Turning to the press conference, we would not expect any signs of the ECB pre-committing to another cut in October as with inflation close to target there is no urgency to do so. Moreover, indications of back-to-back cuts would undermine President Lagarde’s previous assertion that policy rates will not necessarily move lower in a linear fashion.