EM FX: ZAR/JPY, PLN/JPY Extend Sharp Pullbacks From Multi-Year Highs

Despite broader USD pessimism across global markets triggered by the rally in the Japanese yen, EMEA currencies are trading mixed this morning as softer global equities underpin the less stable backdrop for emerging market currencies.

• EURUSD has risen to its highest level since March ahead of the ECB meeting tomorrow, though this has offered little reprieve to the euro-proxy CE3 currencies, with EURPLN extending session gains to around 0.35% at typing.
• PLNJPY has traded lower for the fifth consecutive session, down over 1% today and below the 40.00 handle.
• Similarly, a combination of rand weakness with the impressive rally in the Japanese yen has resulted in a 1.75% sell-off in ZARJPY, which has extended the decline from its all-time highs printed earlier this month to over 4%.
• Meanwhile, China & Hong Kong's equity markets declined following reports that Biden was looking into trade restrictions on companies that provide advanced semiconductors technology to China, providing an additional headwind to EM FX.
• While the Hungarian forint has outperformed its regional peers this morning, its gains against the single currency have moderated as we approach the NY crossover. The Czech koruna remains resilient as recent weakness on the back of more dovish rate pricing eases, with EURCZK little changed at typing.