Research Team at Societe Generale, suggests that the EM currencies are entering a higher volatility regime, with heightened depreciation pressures through to Q1 2017 as a Trump presidency raises protectionist risk premium and higher US yields are disruptive for the fragile equilibrium in emerging markets.

Key Quotes

“After a painful sell-off (EM FX depreciating about 6%), opportunities should arise around Q1 to enter bullish EM positions. However, elevated risk premium means that the terminal value for EM FX is weaker than current spot rates. Through to Q1 2017, our bias will be to opportunistically add bullish dollar risk, but will not preclude tactical opportunities to short dollars when positioning, sentiment, or technicals are stretched. Investors with a long-term horizon are advised to wait until further depreciation offers attractive entry points for bullish EM exposure.” 

“Through to Q1, currencies sensitive to Trump’s policies and to deterioration in risk sentiment are expected to underperform (MXN, BRL, ZAR, TRY, KRW, TWD, PHP) while those more insulated (INR, IDR, THB, RUB, CLP) should outperform. Selective carry strategies may be appropriate. Regionally, EMEA (USD crosses) and LATAM will likely suffer at the expense of Asia in Q1, but the reverse is likely as the year progresses.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

Recommended content


Recommended content

Editors’ Picks

EUR/USD looks range bound in the sub-1.1600 area

EUR/USD looks range bound in the sub-1.1600 area

Following Wednesday's hiccup, EUR/USD resumes its weekly downturn, remaining in the sub-1.1600 range, while the US Dollar (USD) gains momentum across the board on the back of solid retail sales numbers and the weekly labour market report.

GBP/USD remains on the defensive around 1.3400

GBP/USD remains on the defensive around 1.3400

GBP/USD maintains its bearish tilt unachanged toward the end of Thursday’s session, hovering just above recent multi-week lows around the .3400 neighbourhood. The positive UK labour market statistics offered instant support for the British Pound, but the strong tone in the Greenback kept Cable’s price action subdued.

Gold trades with modest losses near $3,340

Gold trades with modest losses near $3,340

Gold remains in auto-pilot around the $3,340 zone per troy ounce as the NA session draws to a close on Thursday. The yellow metal's negative trend stems from the extra improvement in the dollar, rising US yields, and some relief from trade concerns.

Top Crypto Gainers: FLOKI, BONK post double-digit gains, CRV targets $1

Top Crypto Gainers: FLOKI, BONK post double-digit gains, CRV targets $1

Solana-based meme coins Floki and Bonk edged lower by 2% at press time on Thursday, following the 30% gains on Wednesday, ranking as top crypto gainers in the last 24 hours. Curve DAO ranks third with a 21% surge following a triangle setup breakout, targeting the $1 psychological level. 

China’s first-half growth remains on track, though activity data signals caution

China’s first-half growth remains on track, though activity data signals caution

China's second-quarter GDP beat forecasts again with a 5.2% year-on-year growth, driven by strong trade and industrial production. Yet sharper-than-expected slowdowns in fixed-asset investment and retail sales and falling property prices are a concern.

Best Brokers for EUR/USD Trading

Best Brokers for EUR/USD Trading

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025