marctomarket.com / Dr. Win Thin / Jun 18, 2017
EM FX was mixed Friday to cap off a mostly lower week. Obviously, we’re seeing a bit of a washout in EM after the hawkish FOMC. Market was overly complacent and very long EM going into the FOMC meeting. The big question is how deep this selloff gets. For the better part of this year, EM dips have been met with renewed buying. We remain cautious on EM and think that investors should avoid the high beta currencies like ZAR, TRY, BRL, MXN.
Taiwan reports May export orders Tuesday, which are expected to rise 7.6% y/y vs. 7.4% in April. The central bank meets Thursday and is expected to keep rates steady at 1.375%. Taiwan reports May IP Friday, which is expected to rise 1.4% y/y vs. -0.6% in April.
South Africa reports Q1 current account data Tuesday. The deficit is expected to widen to -1.8% of GDP from -1.7% in Q4. It then reports May CPI Wednesday, which is expected to remain steady at 5.3% y/y. This would remain within the 3-6% target range. SARB next meets July 20, and rates are expected to be kept steady at 7.0%.
Hungary central bank meets Tuesday and is expected to keep rates steady at 0.9%. However, it may add stimulus via unconventional measures to offset recent forint strength.