FXStreet (Guatemala) – Analysts at Rabobank noted that in FX, wobbly EM may breathe a sigh of relief as USD sagged on the day, but those struggling to export their way out of growing domestic weakness will soon be cursing that gain.
Key Quotes:
“In major crosses EUR was at 1.1420 post-Fed, putting more heat on Mr. Draghi, while JPY was under 120 again, also putting heat on the BOJ (who moved to La-La Land some time ago).
Arguably China (who Yellen named directly as a Fed focus) may benefit from a temporary reduction in the rush towards USD; however, capital outflows appear to still be a real problem that is not easing yet. On that note, the central government has just released a policy statement discussing how it will open up the economy ahead.
Apparently, this will include speeding up capital-account convertibility (just as they are cracking down on all capital outflows?); widening the futures market (which has just had regulatory shackles put on it); and widening the CNY’s floating band (which right now is more of a tourniquet than a band, just as it was before the shock August devaluation) Let’s hope the gap between word and deed in China is narrower than it’s proving for the Fed.”
(Market News Provided by FXstreet)