EM's outlook: what about the Fed? - BBH

Ross J Burland FXStreet

Analysts at Brown Brothers Harriman offered their outlook for the EM's in reocvery post Brexit hysteria.

Key Quotes:

"After the Brexit-related plunge, EM has recovered nicely. Besides the diminished Brexit concerns, the soft US economy has led many to dial back Fed tightening expectations. Rather than the four hikes the Fed saw in 2016 when the year began, we will likely see only one. Next year, markets are looking for 1-2 more hikes, which is still a very cautious tightening path.

A subdued Fed outlook has allowed EM assets to maintain traction after a rocky start to the year. Until the likely December 14 Fed hike gets closer, we think the global liquidity backdrop remains supportive for EM. Not only has Fed tightening been pushed out, but the ECB and the BOJ are still easing and may ease further.

Whatever the pace and scope of Fed tightening is, we still believe it is very important for investors to continue focusing on the fundamentals and also on hedging out currency risk whenever feasible. Regionally, Latin America is the best equity performer so far in 2016 (up 39.1%), followed by EMEA (12.6%) and then Asia (10.0% YTD). We expect this performance trend to reverse a bit as we move into 2017."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD looks offered below 1.1900

EUR/USD keeps its bearish tone unchanged ahead of the opening bell in Asia, returning to the sub-1.1900 region following a firmer tone in the US Dollar. Indeed, the pair reverses two consecutive daily gains amid steady caution ahead of Wednesday’s key US Nonfarm Payrolls release.

GBP/USD slips back to daily lows near 1.3640

GBP/USD drops to daily lows near 1.3640 as sellers push harder and the Greenback extends its rebound in the latter part of Tuesday’s session. Looking ahead, the combination of key US releases, including NFP and CPI, alongside important UK data, should keep the pound firmly in focus over the coming days.

Gold declines to near $5,050, focus shifts to US jobs data

Gold price falls to near $5,045 during the early Asian session on Wednesday. Traders assess whether prices have found a floor following a historic sell-off. The delayed US employment report for January, which was pushed back due to the recently ended four-day government shutdown, will take center stage later on Wednesday.

Ethereum: Whales buy the dip amid rising short bets

Following one of Ethereum's largest weekly drawdowns, whales are slowly returning to action alongside a drop in retail selling pressure. After slightly selling into the decline at the start of the month, whales or wallets with a balance of 10K-100K ETH began buying the dip last Wednesday as prices crashed further.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.