EMEA Snap-The Hateful Eight:8charts on EM FX

EM FX has been shaken by the relatively hawkish FOMC. But while EM FX has sold off vs. the USD, it has remained broadly resilient vs. EUR, both since the US elections and after yesterday’s FOMC meeting (Chart 1). Further, there has been differentiation within EM FX, with the oil exporters RUB and COP outperforming, and the more exposed TRY and MXN underperforming. Both these factors - resilience vs. EUR and differentiation within EM FX - suggest it has not been a panic-driven sell off in EM FX. We therefore continue to expect that select EM currencies will outperform vs. EUR; we remain bullish on RUB and ZAR, but are generally more bearish on the Asia complex. Our EM Risk Monitor, which is a cross-asset EM-specific measure of risk sentiment, is also back in risk neutral territory after the post-election risk off (Chart 2).