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EM FX: JP Morgan Say Outlook for EM FX is Challenging in 2025, Remain MW Overall

EM FX
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JP Morgan say the outlook for EM FX is very challenging, although technicals argue for patience in adding to bearish positions, and stay MW overall for now.

  • EMEA: JP Morgan turn MW from OW, with an OW on TRY and UW in CEE FX via UWs in CZK and PLN partially balanced with an OW in HUF. In their outright portfolio, JPM hold bearish trades in CZK and RON and a tactical bullish trade in HUF. They see long TRY and ILS as idiosyncratic diversifiers, and are on the sidelines in ZAR.
  • LATAM: Flows to the region have been underwhelming in the past couple of years and a more uncertain external environment sets the bar higher for a substantial recovery in 2025, JP Morgan say. The path ahead depends on how fast we get clarity on relevant policy changes, including tariffs and immigration policies in the US. JPM are UW Latam FX into 2025 via COP.
  • ASIA: JP Morgan remain UW EM Asia FX (via UW CNY, THB vs. OW INR) as risk premia expands given looming tariffs, favouring domestically oriented high yielders vs trade reliant low yielders. They remain short CNH (via options).
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JP Morgan say the outlook for EM FX is very challenging, although technicals argue for patience in adding to bearish positions, and stay MW overall for now.

  • EMEA: JP Morgan turn MW from OW, with an OW on TRY and UW in CEE FX via UWs in CZK and PLN partially balanced with an OW in HUF. In their outright portfolio, JPM hold bearish trades in CZK and RON and a tactical bullish trade in HUF. They see long TRY and ILS as idiosyncratic diversifiers, and are on the sidelines in ZAR.
  • LATAM: Flows to the region have been underwhelming in the past couple of years and a more uncertain external environment sets the bar higher for a substantial recovery in 2025, JP Morgan say. The path ahead depends on how fast we get clarity on relevant policy changes, including tariffs and immigration policies in the US. JPM are UW Latam FX into 2025 via COP.
  • ASIA: JP Morgan remain UW EM Asia FX (via UW CNY, THB vs. OW INR) as risk premia expands given looming tariffs, favouring domestically oriented high yielders vs trade reliant low yielders. They remain short CNH (via options).