6 Apr 2015
EM crosses benefit as Fed hike expectations shift – Nomura
FXStreet (Barcelona) - FX Strategists at Nomura, maintain their long-EM basket strategy, with the technical picture now supporting the bullish view as Fed hikes are being priced out.
Key Quotes
“On the trading front, we have recommended a long-EM basket following the news from the Fed from two weeks ago. This basket (long INR, MXN, CLP and PLN, funded 75% in USD and 25% in EUR) has traded somewhat erratically. But it got a significant boost from the weaker payroll figure for March and the basket is now up 1.7%.”
“The trade continues to be supported by Fed hikes being priced out. And we think this has further to run, as the technical picture is now flipping in a number of EM crosses.”
“Whether this trade can morph from a technical snapback, triggered by a change in the outlook for the Fed, to a more strategic play remains to be seen. The tone of EM data will be the key here.”
Key Quotes
“On the trading front, we have recommended a long-EM basket following the news from the Fed from two weeks ago. This basket (long INR, MXN, CLP and PLN, funded 75% in USD and 25% in EUR) has traded somewhat erratically. But it got a significant boost from the weaker payroll figure for March and the basket is now up 1.7%.”
“The trade continues to be supported by Fed hikes being priced out. And we think this has further to run, as the technical picture is now flipping in a number of EM crosses.”
“Whether this trade can morph from a technical snapback, triggered by a change in the outlook for the Fed, to a more strategic play remains to be seen. The tone of EM data will be the key here.”