EM FX recovered the smile post-FOMC – Danske Bank

Analyst at Danske Bank Thomas Rosenlund noted the positive impact from the recent FOMC meeting on the Emerging Markets space.

Key Quotes

“Emerging markets’ FX rallied following the Fed meeting, recovering much ground lost after the recent pricing of the March Fed rate hike over the past couple of weeks”.

“Notably, the most liquid EM currencies (ZAR, TRY, BRL, MXN and RUB) strengthened, supported by higher commodity prices and an improvement in global risk sentiment”.

“Unless we get a very aggressive fiscal easing or US numbers surprise significantly to the up or downside, the Fed will probably take the backseat as the driver of EM FX in the short term”.

“Together with a fairly stable development in China and relatively solid global growth, this should be a stable or positive environment for EM at least in the near term”.