G-10 and emerging markets on a shaky ground – Deutsche Bank
FXStreet (Delhi) – Research Team at Deutsche Bank, notes that the trading conditions in the G-10 and emerging markets space have further deteriorated over the past fortnight, with trendiness declining at the same time as volatility reached the highest level in more than two years. These remain far from ideal trading conditions.
Key Quotes
“Monetary policy and sovereign risk continue to be the strongest market drivers in G10, though the latter has become more dominant. FX weakness in the commodity bloc over the past three months is now more closely related to market reassessment of sovereign risk than to re-pricing of the monetary policy outlook. Overall, market drivers remain dominant, with broader macro drivers being relegated to the back seat.”
“Re-pricing of sovereign risk has dominated the price action over the past three months, led by the collapse of BRL, RUB, and TRY. Monetary policy designed to ameliorate relentless depreciation through attractive carry levels has so far proved ineffective. Among the macro drivers, valuation is still strongly correlated to the price action in the above markets but indicates increasingly stretched deviations from PPP.”
Research Team at Deutsche Bank, notes that the trading conditions in the G-10 and emerging markets space have further deteriorated over the past fortnight, with trendiness declining at the same time as volatility reached the highest level in more than two years. These remain far from ideal trading conditions.
(Market News Provided by FXstreet)