Daily BriefsMacro

Macro: FX Dashboard: Is Monetary Policy Still Driving FX Returns? and more

In today’s briefing:

  • FX Dashboard: Is Monetary Policy Still Driving FX Returns?

FX Dashboard: Is Monetary Policy Still Driving FX Returns?

By Gautam Jain, PhD, CFA

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.


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