Emerging Markets
Emerging currencies provided some of the more tradeable scenarios last quarter as global growth fears supported a stronger US dollar and regional events provided some short-term trends. The overall outlook for emerging markets is heavily focused on a potential domino effect of global growth to stem from a US-China trade deal. If the global outlook deteriorates, EM could be fall into the danger zone.
The South African rand caught a break at the end of the quarter when Moody’s decided to punt their review that could have erased South Africa’s last investment grade status rating. The rand has been hampered by South African state-run utility Eskom’s financial woes. The troubled utility company will likely need more aid, but that will be difficult to achieve as political divisions continue to prevent reform. Until the rolling blackouts go away, the South African economy will struggle.
President Erdogan has helped make the Turkish lira one of the more volatile currencies. Last month, the restrictive measures put in place before the local elections saw swap rates surge over 1,000%. The long-term effects of preventing investors from hedging their positions will make many investors lose faith in Turkish markets.
Turkey’s central bank (CBRT) continues to try to bring down inflation from the recent 15-year highs and they are expected to switch to an easing bias in the near future. If we do see an outright strong move higher with EM, the lira may underperform.
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Ed Moya
His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.
Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.
Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.
Ed holds a BA in Economics from Rutgers University.
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