FXStreet (Guatemala) – Analysts at Brown Brothers Harriman offered an outlook for the emerging Market in FX.
Key Quotes:
“With negative risks to EM still ahead, we believe it will be very important for investors to continue focusing on the fundamentals. We continue to believe that countries with weak fundamentals and poor growth outlooks will suffer more in the coming months. High yield is unlikely to insulate the bad credits from selling pressures.”
“We still expect further volatility ahead for EM FX, and see further divergence within EM along several axes. (1) Asia for the most part should outperform given China’s role as a regional anchor; (2) Latin America should for the most part under-perform due to regional dependence on commodity exports; (3) EMEA should be mixed, with idiosyncratic risks seen in Russia and Turkey.”
“The March-April stall in the US dollar’s upward march allowed EM assets to stabilize a bit, but improving US data after a typical weak Q1 should move the Fed lift-off back onto the radar screen.”
“Given that we expect the dollar to resume appreciating against the majors, renewed greenback strength is likely to once again spill over into EM. We retain a defensive posture with regards to EM, and we recommend investors to focus on the four factors discussed above.”
(Market News Provided by FXstreet)