Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

We revisit our thesis from early July when we argued that monetary policy was the primary driver of the differentiation within EM currencies. Based on current correlations, we modify the statement to say that the thesis now applies to most but not all currencies. We identify the outliers and connect them with our recent trade recommendation to buy the Chilean peso against the South African rand.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

We revisit our thesis from early July when we argued that monetary policy was the primary driver of the differentiation within EM currencies. Based on current correlations, we modify the statement to say that the thesis now applies to most but not all currencies. We identify the outliers and connect them with our recent trade recommendation to buy the Chilean peso against the South African rand.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Is Monetary Policy Still Driving FX Returns?

The Chilean peso has given up its outperformance from earlier this year following the central bank's dovish hike. We remain constructive on the currency on the back of the market-friendly outcome of the presidential primaries last weekend, upward revisions to Chile's growth, the outlook for copper prices, and the possibility that the central bank raises rates faster than currently priced.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

The Chilean peso has given up its outperformance from earlier this year following the central bank's dovish hike. We remain constructive on the currency on the back of the market-friendly outcome of the presidential primaries last weekend, upward revisions to Chile's growth, the outlook for copper prices, and the possibility that the central bank raises rates faster than currently priced.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Stay Bullish on the Chilean Peso

The Mexican peso has outperformed the broad EM currency complex and we expect it to continue to do so as more rate hikes are on the way due to persistently high inflation and the macroeconomic backdrop remains supportive. We reiterate our trade recommendation to go Long Mexican peso against Short Canadian dollar.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

The Mexican peso has outperformed the broad EM currency complex and we expect it to continue to do so as more rate hikes are on the way due to persistently high inflation and the macroeconomic backdrop remains supportive. We reiterate our trade recommendation to go Long Mexican peso against Short Canadian dollar.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Mexican Peso Should Continue Outperforming

The RRR cut by PBOC last week has thrown the market into confusion. Our view is that this is not the beginning of an aggressive easing cycle, rather a preemptive move to ensure that the economic recovery stays in place. However, the move has led to concerns about the extent of economic weakness in China ahead, which if true could be negative for the renminbi and, in turn, for EM FX.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

The RRR cut by PBOC last week has thrown the market into confusion. Our view is that this is not the beginning of an aggressive easing cycle, rather a preemptive move to ensure that the economic recovery stays in place. However, the move has led to concerns about the extent of economic weakness in China ahead, which if true could be negative for the renminbi and, in turn, for EM FX.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Spillover Risk from China to EM FX

Latin American currencies have underperformed against the broad EM complex since the start of the pandemic. In this note, we address the question that if we are entering a low-volatility period, could it be time for LatAm currencies to make up for some of their underperformance?Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

Latin American currencies have underperformed against the broad EM complex since the start of the pandemic. In this note, we address the question that if we are entering a low-volatility period, could it be time for LatAm currencies to make up for some of their underperformance?Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Is It Time for Latin American Currencies to Turn Around?

Taiwan

The New Taiwan dollar is the official currency of Taiwan

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FX Dashboard: Is Monetary Policy Still Driving FX Returns?

We modify our thesis from early July when we argued that monetary policy was the primary driver of the differentiation within EM currencies to say...

Gautam Jain, PhD, CFA

FX Dashboard: Stay Bullish on the Chilean Peso

We remain constructive on the Chilean peso on the back of the market-friendly outcome of the presidential primaries last weekend and upward...

Gautam Jain, PhD, CFA

FX Dashboard: Mexican Peso Should Continue Outperforming

We expect the Mexican peso (MXN) to continue outperforming as more rate hikes are on the way due to persistently high inflation and reiterate our...

Gautam Jain, PhD, CFA

FX Dashboard: Spillover Risk from China to EM FX

The RRR cut by PBOC last week has led to concerns about the extent of economic weakness in China ahead, which if true could be negative for the...

Gautam Jain, PhD, CFA

FX Dashboard: Is It Time for Latin American Currencies to Turn Around?

In this note, we address the question that if we are entering a low-volatility period, could it be time for LatAm currencies to make up for some of...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)