The clear currency market winner so far in the turmoil, if you don’t count Bitcoin, is the JPY, but the FX market is very choppy with a range of uncertainties swirling notes analysis team at Amplifying Global FX Capital.
“The AUD rallied after signs of improvement taking hold in the Australian labor market. But on the other hand, Chinese property prices were weaker, following on from weaker activity indicators early in the week, generating risks of slowing demand for commodities. Both the AUD and NZD failed to bust out of the negative trends taking hold in recent months.”
“The market is likely to remain in a mixed frame of mind with respect to emerging markets. A damaged US president and stalled policy agenda may tend to weaken the USD, slow US rate rises and encourage more capital outflow from expensive US equities to emerging markets and Europe. On the other hand, the risk of US market turmoil may undermine global equity markets and see capital retreat to cash. At least for a time, this may undermine emerging markets as investors retreat from positions taken over the last month or so.”
“The sharp drop in BRL on its own political scandal will not help restore jittery investor confidence. However, this is a very Brazil-specific event.”