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EM FX Mixed Amid Modest Risk-Off Tone

CROSS ASSET
  • G10 FX trades with a modest risk-off feel, evidenced by JPY and USD topping the currency pile. Regional equities sit slightly lower, despite reports of optimism in negotiations between McCarthy and Biden in sealing a deal on the debt ceiling. PMI data across Europe was mixed, with Eurozone services outperforming while manufacturing lagged.
  • The market tone has weighed on EM currencies, with most currencies in the space in the red against the greenback. Nevertheless, PLN and CZK see slight gains against the EUR while HUF is the most notable underperformer. The NBH rate decision is the key risk event in EM today, with market consensus calling for the first cut to the 18% effective rate. Turkey and South Africa rate decisions take focus on Thursday.
  • Aside from PMIs and any further debt limit developments, focus will be on data including New Home Sales and regional Fed activity readings (Philly Fed non-manuf, and Richmond Manuf). ECB's Villeroy and Nagel as well as Dallas Fed's Logan are the speakers of note today.

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