EM’s: Latin America least favoured – BBH

By FXStreet FXStreet (Guatemala) – Analysts at Brown Brothers Harriman explained that given the volatile price action seen this quarter in EM currencies, we thought it would be a good idea to again take a step back to see how EM FX has performed in the bigger picture.

Key Quotes:

“EM FX gained some temporary traction in early Q4, when soft US data pushed back Fed lift-off expectations.
Well, that early Q4 bounce in EM has ended, and we believe the market has returned to the medium-term bear trend. The point of this piece is to identify some potential retracement objectives for the main EM currencies from that bounce, as well as some longer-term targets.

Over the medium-term, we still retain a defensive posture with regards to EM and would recommend investors remain selective (see our recent EM FX Model Update). We expect further volatility and weakness ahead for most of EM FX, and so dedicated EM investors should look for relative value opportunities as well as opportunities to hedge. Divergences within EM will continue to be seen, with sliding commodities contributing to this divergence. In general, we continue to favor Asia, with EMEA next and Latin America last.

Latin America

Brazil: …read more

Source:: FX Street