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EM FX: Risk Aversion, Commodity Weakness Keeps Pressure on EM FX

EM FX
BulletEM BulletEmerging Market News

The risk-off tone across markets has kept the pressure on emerging market and high beta currencies throughout Tuesday trade, with all major EMEA and Latam currencies in the red versus the dollar. Headline drivers for the earlier moves remain light but have been aided by large declines for energy and industrial metals as well as tech-driven equity declines.

  • Meanwhile, the latest leg lower in crude has been driven by comments from the Libyan Central Bank Governor, who hinted at an agreement to return domestic supply back to the market. Before this, our Commodities team pointed to weak demand and expectations of additional supply from OPEC+ from Q4 onwards.
  • Outperformance of the yen has prompted some solid losses for EM/JPY crosses, with the likes of MXN and ZAR recording >1% declines against the Japanese currency.
  • Focus in emerging markets this week falls on central bank rate decisions in Poland, Chile and Malaysia, with broader market focus on the NFP release at the end of the week.
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The risk-off tone across markets has kept the pressure on emerging market and high beta currencies throughout Tuesday trade, with all major EMEA and Latam currencies in the red versus the dollar. Headline drivers for the earlier moves remain light but have been aided by large declines for energy and industrial metals as well as tech-driven equity declines.

  • Meanwhile, the latest leg lower in crude has been driven by comments from the Libyan Central Bank Governor, who hinted at an agreement to return domestic supply back to the market. Before this, our Commodities team pointed to weak demand and expectations of additional supply from OPEC+ from Q4 onwards.
  • Outperformance of the yen has prompted some solid losses for EM/JPY crosses, with the likes of MXN and ZAR recording >1% declines against the Japanese currency.
  • Focus in emerging markets this week falls on central bank rate decisions in Poland, Chile and Malaysia, with broader market focus on the NFP release at the end of the week.