Breaking News

The Emerging-Market Week Ahead

By Marc ChandlerMarket OverviewAug 26, 2013 10:15AM ET
The Emerging-Market Week Ahead
By Marc Chandler   |  Aug 26, 2013 10:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
  • Israel central bank meets Monday and is expected to keep rates steady at 1.25%.
Acting Governor Flug continues to chair the meetings as the search for a successor to Fischer continues. There are reportedly three candidates that have met with the vetting committee. ILS has gotten caught up in the EM selloff, but continues to outperform. Most other EM currencies have already weakened past their July lows against the dollar. Break above 3.60 targets 3.62, 3.65, and then the July high near 3.68.
  • South Africa reports Q2 GDP Tuesday, and is expected at 3.3% SAAR (1.9% y/y) vs. 0.9% SAAR (1.9% y/y) in Q1.
On Friday, South Africa reports July money and private sector credit and both are expected to show continued sluggishness. It will also report July trade and budget data Friday. Overall, we believe the negative backdrop of twin deficits, slow growth, and high inflation will continue and should dampen enthusiasm for the rand.

USD/ZAR made new highs for this move near 10.44 last week before recovering. The March 2009 high near 10.73 lies ahead, while support for USD/ZAR seen near 10.15 and then 10.00.
  • Hungary central bank meets Tuesday and is expected to cut rates again.
After the last meeting, officials said that easing would continue until the policy rate bottomed around 3.0-3.5% but would be at a slower pace. The majority of analysts look for a 10 bp cut to 3.95, though there is a smattering of calls for 15 bp and 25 bp cuts. The forint held up reasonably well during this latest EM selloff, with EUR/HUF unable to make much headway above 300. Support seen near August low of 296, while resistance seen near the August high of 301.
  • Brazil central bank meets Wednesday and is expected to hike rates by 50 bp to 9.0%.
Brazil also reports Q2 GDP and July budget data on Friday. Growth is expected to pick up slightly to 2.5% y/y (0.9% q/q) from 1.9% y/y (0.6% q/q) in Q1. FX measures taken last week by the central bank, along with some stability in market sentiment, helped the real recover but further gains will be tough as EM sentiment remains negative. Support for USD/BRL seen in the 2.30 area, while resistance is seen near the 2.45 area.
  • Turkey reports July trade on Thursday, expected at -$8.7 bln vs. -$8.6 bln in June.
Exports have slowed sharply in Q2, and have contracted y/y for three of the past four months. Import demand has remained firm, and so the external accounts are likely to continue worsening. Last week’s surprise hike in the ceiling of the rates corridor has done little to support the lira as USD/TRY made a new all-time high near 2.00 on Friday, and is currently trading near that key level. Break above 2.00 seems only a matter of time.
  • Colombia central bank meets Friday and is expected to keep rates steady at 3.25%.
The economy has stabilized enough to keep the central bank on hold since March, and the weaker peso has helped as well. Inflation remains right near the bottom of its 2-4% target range, and so the central bank has room to ease if the economy starts to slow too much again. For USD/COP, support seen near 1900 while resistance seen near 1935 and then 1950.
  • Over the weekend, China will report official PMI and final HSBC PMI readings for August.
HSBC flash reading jumped to 50.1 from 47.7 in July. Official PMI is seen rising to 5.5 from 5.3 in July. Worries about a China hard landing have eased for now, but we warn markets not to get too bulled up on the China growth story. Growth is likely to remain subpar in the coming quarters. We see USD/CNY trading sideways in the 6.10-6.15 range for the time being.

(from my colleagues Dr. Win Thin and Ilan Solot)
The Emerging-Market Week Ahead

Related Articles

The Emerging-Market Week Ahead

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email