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Many emerging market currencies....>

EMERGING MARKETS
EMERGING MARKETS: Many emerging market currencies are on the verge of breaking
down versus USD. BRL traded this week at weakest since Jun 16, MXN and ZAR
weakest since Jan 18, RUB moving back to April post-sanctions lows, TRY near
all-time low.
- JPMorgan EM Currency Index is testing its two-year uptrend.
- Rising US yields are the key catalyst: EM sovereign spreads remain tight but
the 10Y Tsy move through 3.00% has been paralleled by a move in EMBI yields to
2-year highs, putting stress on EMs. 
- US trade rhetoric is less important but still a factor. The CNY is showing
signs of weakness, and MXN maintains its downtrend despite more optimistic
outlook for NAFTA talks recently.
- A breakdown in EM FX would be consistent with further downside in developed
market FX vs USD, and not just commodity-dependent currencies. 90-day
correlation with the JPM EM FX index is 0.75 for AUD, 0.70 for EUR, 0.65 for
NZD, 0.63 for CAD. JPY correlation is just 0.24.

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