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Greenback Weakness Lends Support to Emerging Market FX Basket

EM FX
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  • With the NY crossover coinciding with a fresh bout of USD sales, and associated pick up in activity, the USD Index has slipped to the worst levels of the session and edged through the 200-dma support of 104.41.
  • Lower US yields are also providing a tailwind to the emerging market currency complex with the likes of USDMXN and USDZAR erasing their initial gains on the day and sliding to fresh session lows in recent trade. Any pre-election jitters for either of these currencies appear to be being brushed aside amid the more stable risk backdrop.
  • Both the Hungarian Forint and the Brazilian real have risen roughly half a percent against the dollar and are outperforming EM peers. Support for USDBRL is seen at 5.1000, the 50-day EMA
  • Both Barclays and Credit Agricole pointed toward dollar selling into month-end, with the latter noting a more moderate signal given the moves in equity markets.
  • US Consumer confidence data the next highlight on the data calendar ahead of appearances from Fed's Kashkari, Cook & Daly - although few fresh signals on Fed policy are expected today.
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  • With the NY crossover coinciding with a fresh bout of USD sales, and associated pick up in activity, the USD Index has slipped to the worst levels of the session and edged through the 200-dma support of 104.41.
  • Lower US yields are also providing a tailwind to the emerging market currency complex with the likes of USDMXN and USDZAR erasing their initial gains on the day and sliding to fresh session lows in recent trade. Any pre-election jitters for either of these currencies appear to be being brushed aside amid the more stable risk backdrop.
  • Both the Hungarian Forint and the Brazilian real have risen roughly half a percent against the dollar and are outperforming EM peers. Support for USDBRL is seen at 5.1000, the 50-day EMA
  • Both Barclays and Credit Agricole pointed toward dollar selling into month-end, with the latter noting a more moderate signal given the moves in equity markets.
  • US Consumer confidence data the next highlight on the data calendar ahead of appearances from Fed's Kashkari, Cook & Daly - although few fresh signals on Fed policy are expected today.