EM FX set to steal the show

With April’s CPI report confirming that the Fed’s hiking cycle is likely completed and ECB communications having very little impact on market expectations, attention started to move away from rates and towards political developments and financial stability. In particular, the US debt ceiling debacle kept risk sentiment contained, while tense diplomatic relations between the US and South Africa led to a sharp sell-off in the rand, especially after Eskom, the state electricity provider, signalled further loadshedding earlier in the week. Next week, EM FX is set to be front and centre for markets, especially given the ongoing diplomatic dispute in South Africa and the likely announcement of Turkey’s presidential election on Sunday evening. On top of that, the PBoC could publish a lower 1-year medium term lending facility rate, while Banxico could call an end to its hiking cycle. 

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Authors: 

Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

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