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29 Dec 2015
2016 EM FX Themes – RBC CM
FXStreet (Delhi) – Research Team at RBC Capital Markets, lists down their strategic trades amongst the EM FX space for 2016.
Key Quotes
• “We like short CAD/MXN in H1 on policy and fundamental divergence. We believe USD/KRW higher will be crystalized by additional USD/CNY volatility, and overall RMB weakness.
• Our BRL-put trade reflects poor Brazilian fundamentals on easy fiscal policy and higher inflation plus EM corporate debt deleveraging. We believe debt concerns are less of an issue in Russia than Turkey (and we like short TRY/RUB).
• Fed hikes should trigger ILS weakness; ECB easing may support PLN assuming NBP stays neutral. We believe MYR fiscal concerns may wane during the year; MAS will likely ease weakening SGD.”
Key Quotes
• “We like short CAD/MXN in H1 on policy and fundamental divergence. We believe USD/KRW higher will be crystalized by additional USD/CNY volatility, and overall RMB weakness.
• Our BRL-put trade reflects poor Brazilian fundamentals on easy fiscal policy and higher inflation plus EM corporate debt deleveraging. We believe debt concerns are less of an issue in Russia than Turkey (and we like short TRY/RUB).
• Fed hikes should trigger ILS weakness; ECB easing may support PLN assuming NBP stays neutral. We believe MYR fiscal concerns may wane during the year; MAS will likely ease weakening SGD.”