Firming oil and sour sentiment.....>

EMERGING MARKETS: Firming oil and sour sentiment dents EMFX for second session

- Currencies of oil importers took another hit this morning after already

suffering under the weight of the WTI and Brent crude rally last Friday. The

energy complex added to recent gains today in anticipation of further unrest

between the US and Iran, leaving WTI and Brent higher by at least 1% and within

range of the 2019 highs printed in late April. This led the likes on INR, KRW

and CLP lower, with weakness in regional equities adding to the downside

pressure.

- EMFX implied vols are generally higher, with the most notable gains seen in

the 1m BRL, CLP and KRW contracts. Spot USD/KRW has now broken above the 50-dma

at the close, opening a move on the 200-dma at 1176.34 and looks to close the

phase one trade deal gap at 1186.90 next. Similarly, USD/INR is well within

range of the mid-November highs at 72.2437.

- Services PMIs from Brazil are due today, but focus will likely remain on any

US/Iran tension escalation as well as rate decisions later in the week from

Poland, Israel and Peru.