FxWirePro: A run through on EMFX radar

We maintain medium weight (MW) in EM FX. The last month has seen plenty of volatility with EM FX continuing to trend weaker, with some more significant volatility in Argentina and Turkey. This weakness has been the result of factors that echo Q2’18’s themes, namely a stronger USD given US growth has outperformed the rest of the world, which exposes weakness in EM countries. 

We cut the overweight (OWs) in EM FX to MW a month ago given the strong Q1 performance, larger positioning, a still mixed global growth picture, and EM idiosyncratic sources of volatility. This still feels the right position to have in EM risk as we head into May. The fundamental picture for EM still has our economists forecasting a growth upturn in Q2’19, so the macro risks to EM assets are still largely coming from outside EM. 

Trade-Radar:

In EM Asia, we closed OW MYR vs. UW PHP on 18th April but added outright long (CNH, TWD) vs. short (USD, EUR) on 17th April given the better China cyclical backdrop. 

In CEE FX we stay MW FX with OW PLN vs. UW CZK and a new UW HUF. 

In EMEA EM HY FX we take profit on long USDTRY and hold USDZAR put spreads and USDRUB call spreads. 

In Latin America, we stay MW FX but added UW MXN hedges on 25th April to existing UW UYU vs. OW BRL and COP. In outright trades, we went short 1y USDARS NDF on 29th April, add USDBRL 1x2 put spreads, opened short EURCOP and rolled USDMXN call KOs into 3m USDMXN call RKOs on 26th April. Courtesy: JPM

Currency Strength Index: FxWirePro's hourly USD spot index was at 75 (bullish) while articulating (at 12:38 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex