Tag Archive: South Africa

FX Daily, April 30: ECB Takes Center Stage

Overview: Equities continue to recover even as deep economic contractions are reported. Yesterday, the US said Q1 GDP contracted at an annualized pace of 4.8%, while the eurozone reported today that output fell 3.8% quarter-over-quarter in Q1.  Hong Kong and South Korea were closed, but the rest of the Asia Pacific bourses rallied strongly with several, including Australia and India, rising more than 2%.

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FX Daily, March 30: Monday Blues

Overview: Risk appetites remain in check as the spread of the coronavirus is leading to more and longer shutdowns.  Asia Pacific equities fell with Australia, the notable exception.  Its benchmark rallied a record 7%, encouraged by additional stimulus measures.

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As the Data Comes In, 2019 Really Did End Badly

The coronavirus began during December, but in its early stages no one knew a thing about it. It wasn’t until January 1 that health authorities in China closed the Huanan Seafood Wholesale Market after initially determining some wild animals sold there might have been the source of a pneumonia-like outbreak. On January 5, the Wuhan Municipal Health Commission issued a statement saying it wasn’t SARS or MERS, and that the spreading disease would be...

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FX Daily, December 3: US Brandishes Tariff Weapon and Weakens Animal Spirits

Asia Pacific equities mostly declined in sympathy with yesterday's large sell-off in the US and Europe. China and Taiwan were the notable exceptions, while Australia's 2.2% decline, following the central bank meeting that resulted in what many are seeing as a hawkish hold, led the move lower. Europe's Dow Jones Stoxx 600 fell 1.6% yesterday, the largest loss in two months, and is extending the losses for a third session today.

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FX Daily, November 4: Investor Optimism Carries into the New Week

Overview: Investor optimism is reflected by the risk-taking appetite that is lifting equity markets and bond yields. With Japanese markets closed for a national holiday, the MSCI Asia Pacific Index was led higher by more than 1% gains in Hong Kong, Taiwan, South Korea, and Thailand. The regional benchmark advanced for the seventh session in the past eight and is approaching the year's high.

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EM Preview for the Week Ahead

EM benefited greatly from the improvement in US-China trade relations and quite possibly Brexit.  The dollar is likely to remain under some pressure near-term as a result. Yet we must caution investors against getting too optimistic.  The details of the partial trade deal still need to be worked out, while existing tariffs will still remain in place if the deal is signed next month as most expect.

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Emerging Markets: Preview of the Week Ahead

EM FX ended mixed in Friday, capping off an up and down week. RUB and TRY initially firmed on their respective rate hikes but gave back some of those gains heading into the weekend. Trade tensions are likely to remain high, as press reports suggest President Trump is pushing ahead with tariffs on $200 bln of Chinese imports even as high-level talks are planned.

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Emerging Markets: What has Changed

Philippine central bank signaled another big hike. Poland central bank appears to be moving its forward guidance out further. Russia officials are sending confusing signals regarding monetary policy. Russia officials stand ready to support the ruble debt market if new US sanctions negatively impact it. South Africa’s African National Congress pledged to undertake land reform responsibly.

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Emerging Market Week Ahead Preview

EM FX ended last week on a firm note, but weakness resumed Monday. Higher than expected Turkish inflation hurt the lira, which in turn dragged down BRL, ARS, ZAR, and RUB. We expect EM to remain under pressure this week when the US returns from holiday Tuesday.

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As Emerging Market Currencies Collapse, Gold is being Mobilized

In recent weeks, global financial markets have been increasingly spooked by an intensifying crisis in emerging market currencies including those of Turkey and Argentina. Add to this the ongoing currency crisis in Venezuela and the currency problems of Iran.

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FX Weekly Preview: Macroeconomic Considerations

The force that had pushed the US 10-year Treasury yield to 3% and the dollar above JPY113 at the start of the month, and the euro to $1.13 a couple of weeks ago has dissipated. The 10-year yield is near 2.80%. The dollar was near two-month lows against the yen a week ago, and the euro was back toward the middle of its previous $1.15-$1.18 trading range.

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Emerging Markets: Week Ahead Preview

EM FX was whipsawed last week but ended on a firm note. We look past the noise and believe that the true signals for EM remain higher US interest rates and continued trade tensions, both of which are negative. Turkish markets reopen after a week off. Nothing fundamentally has changed there, and so it still poses some spillover risk to wider EM.

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Emerging Markets: Preview of the Week Ahead

EM FX stabilized last week as the situation in Turkey calmed somewhat. Reports Friday that the US and China are hoping to resolve the trade dispute also helped EM FX ahead of the weekend. However, TRY remains vulnerable as the US threatens more sanctions due to the pastor. Both S&P and Moody’s downgraded it ahead of the weekend and our own ratings model points to further downgrades ahead. Turkish markets are closed this week for holiday.

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Emerging Markets: Preview of the Week Ahead

EM FX came under greater pressure last week as the situation in Turkey deteriorated. With no weekend developments as of this writing, we expect Turkish assets to remain under pressure this week. Five worst EM currencies YTD are TRY (-41%), ARS (-36%), RUB (-15%), BRL (-14.5%), and ZAR (-12%). All five have serious baggage that warrants continued underperformance.

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Emerging Markets: Preview of the Week Ahead

EM FX has come under pressure again due to ongoing trade tensions and rising US rates but saw some modest relief Friday after the PBOC announcement on FX forwards. This helped EM FX stabilize, but we do not think the negative fundamental backdrop has changed. Best performers last week were MXN, PHP, and PEN while the worst were TRY, ZAR, and KRW.

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Emerging Markets: Week Ahead Preview

EM FX enjoyed a respite from the ongoing selling pressures, with most currencies up on the week vs. the dollar.  Best performers were CLP, MXN, and ZAR while the worst were TRY, CNY, and COP.  BOJ, Fed, and BOE meetings this week may pose some risks to EM FX.

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Emerging Markets: What Changed

PBOC fixed USD/CNY at the highest level since December 14. Bank Indonesia delivered a larger than expected 50 bp to 5.25%. Bulgarian Prime Minister Boyko Borissov survived a second no-confidence vote this year. Turkish President Recep Tayyip Erdogan was re-elected but with sweeping new powers. Saudi Arabia, Kuwait, and UAE are reportedly in talks to help stabilize Bahrain.

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Emerging Markets: Preview of the Week Ahead

EM FX ended Friday mixed, and capped off a mixed week overall as the dollar’s broad-based rally was sidetracked. EM may start the week on an upbeat after PBOC cut reserve requirements over the weekend. Best EM performers last week were ARS, MXN, and TRY while the worst were THB, IDR, and BRL.

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Emerging Markets: Week Ahead Preview

EM FX was mixed on Friday but capped off a largely losing week. MYR, CLP, and CNY were the best performers over the last week, while ARS, TRY, and ZAR were the worst. We expect EM FX to continue weakening, but note that with very few fundamental drivers this week, we may see some consolidation near-term.

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Emerging Markets: Preview of the Week Ahead

EM FX ended Friday on a mixed note, capping off a roller coaster week for some of the more vulnerable currencies.  We expect continued efforts by EM policymakers to inject some stability into the markets. However, we believe the underlying dollar rally remains intact.  Central bank meetings in the US, eurozone, and Japan this week are likely to drive home that point. 

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