EM FX: Persisting Post-Fed USD Strength Weighs on EM FX
Persisting post-Fed dollar strength continues to weigh on EM FX, although the extent of weakness across the space is notable given broadly lower crude prices on the session and little movement in US yields, with short-term technical factors likely contributing. * HUF and ZAR weakness stand out. USDHUF is up around 1%, approaching a cluster of highs near 320, while for ZAR, the >1% drop in spot gold provides an additional headwind ahead of the SARB decision this afternoon. * As noted earlier, the technical backdrop has amplified the move in MXN. The latest extension higher in USDMXN has been reinforced by yesterday's break of trendline resistance drawn from the year's high. Topside momentum has built above the break around 17.25, with the pair now testing 17.40 ahead of the NY crossover. The Banxico decision is also due this week. * Similarly, technical factors are likely amplifying the move in USDPLN. The pair has broken through the July highs to fresh cycle highs, up around 0.7% at writing and now at its highest level since May last year.
Persisting post-Fed dollar strength continues to weigh on EM FX, although the extent of weakness across the space is notable given broadly lower crude prices on the session and little movement in US yields, with short-term technical factors likely contributing. * HUF and ZAR weakness stand out. USDHUF is up around 1%, approaching a cluster of highs near 320, while for ZAR, the >1% drop in spot gold provides an additional headwind ahead of the SARB decision this afternoon. * As noted earlier, the technical backdrop has amplified the move in MXN.
The latest extension higher in USDMXN has been reinforced by yesterday's break of trendline resistance drawn from the year's high. 40 ahead of the NY crossover. The Banxico decision is also due this week. * Similarly, technical factors are likely amplifying the move in USDPLN.
7% at writing and now at its highest level since May last year.