EMFX to remain resilient to USD strength - Deutsche

Research Team at Deutsche Bank continue to see some strength in certain emerging market currencies against the US dollar. 

Key Quotes: 

“EMFX has been resilient to USD strength and we expect this to hold as global portfolios gradually rotate into more growth-sensitive assets in EM. On the view that the USD rise is fading, we maintain short USD/BRL and USD/MXN via options, and long BRL and PEN vs. CLP. Sell USD/COP low strike puts as the economy slows.”

“Stay selectively constructive across EMEA, where we see room for further RUB appreciation. Gradually improving fundamentals should set a floor for USD/ZAR – stay long. We also like short PLN vs. EUR and SEK.”

“In rates, EMEA markets underperformed on bear-steepening in core-markets and domestic developments. Still, as this repricing may have entered its tail end and we see room for aggressive cuts in Russia, some extra easing in Turkey, and markets to price out hikes in South Africa we maintain receivers (in the belly of Russia and Turkey and the long-end of South Africa).”