EM: Preview for the week ahead – BBH

By FXStreet FXStreet (Delhi) – Research Team at BBH, suggests that EM starts 2016 on a weak footing, with negative sentiment carrying over from 2015 as the global backdrop remains poor, with the Fed likely to continue its tightening cycle with another hike in March and commodity prices remain near the lows, while China data suggests that the slowdown (albeit modest) continues.

Key Quotes

“Idiosyncratic EM risk remains in play, but in some instances could take a bit of a breather. Brazil’s congress is effectively on holiday until well into February, and so risks of negative impeachment headlines have ebbed. On the other hand, this means no progress on fiscal measures until Q2. South African and Turkish political risk could also quiet down, but negative fundamentals remain in play for all three of these countries and support our call for further ratings downgrades.

Brazil reports November IP Thursday, and is expected at -10.3% y/y vs. -11.2% in October. Brazil reports December IPCA inflation Friday, and is expected to rise 10.78% y/y vs. 10.48% in November. This would be a new cycle high and the highest since November 2003. COPOM next meets January 20, and we think the tightening cycle …read more

Source:: FX Street