What’s going on here?
Most emerging market currencies edged lower on August 28, 2024, as the dollar strengthened, with MSCI’s emerging market currencies index down 0.1% and the stocks index flat.
What does this mean?
Investors are closely watching upcoming US economic data to gauge global monetary policy direction, particularly the Federal Reserve’s personal consumption expenditures (PCE) index. The dollar index, which measures the greenback against six global peers, ticked up 0.2%, even though it’s still at its lowest level this year. An FX strategist at ING suggested the dollar might experience a small rebound as the impact of Federal Reserve Chair Jerome Powell’s Jackson Hole speech diminishes and risk sentiment softens. Meanwhile, China’s yuan slipped for the third straight session, and Israel’s shekel appreciated ahead of the Bank of Israel’s rate decision.
Why should I care?
For markets: Navigating the waters of uncertainty.
Emerging market currencies are reacting to the strengthening dollar. South Africa’s rand slipped 0.2%, while the local stock index remained flat. In Asia, South Korea’s won led losses with a 0.7% fall, and Thailand’s baht weakened by 0.2%. Moody’s warning about potential ‘credit consequences’ for Israeli debt issuers if a full-scale military conflict arises adds another layer of risk for investors.
The bigger picture: Global economic shifts on the horizon.
Global equities are largely muted as markets focus on Nvidia’s quarterly results. Meanwhile, the International Monetary Fund (IMF) approved a new $13.8 billion credit line for Chile, and Turkish inflation is forecasted to drop to 52.2% in August. These developments underscore the dynamic economic shifts and policy decisions shaping the global landscape, pushing investors to stay vigilant about emerging trends and risks.
