According to analysts at Rabobank, the cautiously optimistic sentiment observed over the past few sessions is evaporating quickly after China indicated that unless the US changes its approach and shows sincerity, it would be pointless for US officials to travel to Beijing for another round of trade talks.
“China’s hawkish rhetoric implies that it will be difficult to reach a trade deal as Beijing seems to be ready for a prolonged dispute with the US. Such prospects do not bode well for the EM assets.”
“The widening gap between USD/CNY and the MSCI EM FX Index is an ominous signal that the EM currencies are likely to come under stronger selling pressure to catch up with the falling yuan.”
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