2023-10-06 09:24:42
Emerging market currencies and stocks continued to rally Friday ahead of the release of a highly anticipated U.S. jobs report that will be crucial in determining interest rate expectations, although both classes of assets are on track to suffer a third consecutive week of losses.
MSCI’s index of emerging market shares rose 0.7%, while currencies added 0.1% by 0856 GMT.
Both indexes enjoyed some respite at the end of a trying week, which saw investors flee riskier assets following a rout in bond markets on expectations that the Federal Reserve would maintain monetary policy stricter for longer.
For the week, however, EM stocks have lost 1.6% so far, while currencies are down 0.3%.
While the turmoil in bond markets has calmed for the moment, analysts say the U.S. nonfarm payrolls report due at 1230 GMT will be crucial in determining how long U.S. monetary policy remains tight, and hence will shape the outlook for emerging market assets.
“The pause in the bond slide provides some room for the recovery of most currencies once morest the dollar, Francesco Pesole, FX strategist at ING, said in a note.
“However, US jobs numbers are the big story of the week and a strong rise might easily put markets back on a downward trajectory and restart aggressive dollar buying.
In central and eastern Europe, the Czech crown remained stable once morest the euro following central bank minutes showed policymakers debated whether to start cutting borrowing costs before the end of the ‘year.
Meanwhile, Egyptian sovereign dollar bonds lost almost 3 cents following rating agency Moody’s lowered the North African country’s credit rating from ‘B3’ to ‘Caa1’, citing worsening l debt accessibility.
The Indian rupee was moderate once morest the dollar following the country’s central bank kept its key lending rate as expected but signaled it would keep rates high and liquidity tight.
“The vulnerability of inflation to supply shocks, as seen over the past two months, and the still-steady momentum of growth, suggest little reason to change approach,” they wrote Barclays analysts in a note.
Meanwhile, the Russian ruble weakened to its lowest level in more than seven weeks, surpassing 101 once morest the dollar, under pressure from falling oil prices and reduced supply of foreign currencies from exporters.
For the CHART on the performance of emerging foreign exchange markets in 2023, see For the CHART on the performance of the MSCI Emerging Markets Index in 2023, see https://tmsnrt.rs/2OusNdX
For information on emerging markets
For market report on CENTRAL EUROPE, see
For market research on TURKEY, see
For a market report on RUSSIA, see
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