24 Oct 2013
Flash: US disappointment not quite EM's gain - BAML
FXstreet.com (London) - Analysts at Bank of America Merrill Lych Alberto Ades and Isidore Smart said following the US fiscal resolution, the weaker-than-expected non-farm payroll number originally emboldened investors to jump back into risk/carry trades.
Key Quotes:
“However, the market is not behaving as most would have expected and EM FX gave back some of the immediate post-payroll gains”.
“Should the relationship between weaker US data and stronger EM asset prices hold, we would expect currencies to grind higher in the coming months”.
“The payroll data were weaker than expected without even incorporating the potentially negative effect of the shutdown. So there could be some downside risk to October data releases too, and our US team continues to argue that the risks to its January tapering call are that it gets delayed further”.
Key Quotes:
“However, the market is not behaving as most would have expected and EM FX gave back some of the immediate post-payroll gains”.
“Should the relationship between weaker US data and stronger EM asset prices hold, we would expect currencies to grind higher in the coming months”.
“The payroll data were weaker than expected without even incorporating the potentially negative effect of the shutdown. So there could be some downside risk to October data releases too, and our US team continues to argue that the risks to its January tapering call are that it gets delayed further”.