Modestly constructive against a wall of worry
Investment Solutions - FX Strategy
 
 
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Dears colleagues,

Welcome to the inaugural edition of Lombard Odier’s EM FX Monthly !

This publication lays out our views, forecasts, and preferences for the major liquid EM currencies.

Key highlights:

  • EM currencies are facing structural challenges, but the bulk of the latter-2018 weakness can be attributed to trade-related uncertainty. Accordingly, given our base case scenario for some de-escalation of trade-related uncertainties, we are modestly constructive on EM FX. 
  • Geographically, we believe Asian currencies should perform better as the region benefits from modestly improving global growth and a firmer CNY. LatAm is the most undervalued, but political risks cloud visibility. CEEMEA should register a more mixed performance.
  • In Asia, the CNY and MYR are our top picks. Among the high-yielders, we prefer the IDR to the INR. 
  • Within LatAm, we favour the MXN but remain more cautious on the BRL. Among the currencies afflicted by political risks, we prefer the PEN and remain cautious on the COP. CLP could present value after the event risk of a constitutional referendum passes in Q2.
  • Finally, in CEEMEA, among the high-yielders we like the RUB, but are cautious on the TRY and ZAR. Among the low-yielders, we fancy the ILS, remain wary of the HUF, but are warming up to the CZK.

FX Forecasts:

  Q419 Q220

USDCNY

6.95

6.80

USDIDR

13 933  13 675

USDMYR

4.12 4.00

USDTHB

30.15 29.70

USDMXN

19.04 18.42

USDBRL

4.12 4.02

USDCOP

3 465 3 361

USDRUB

63.10 61.70

USDTRY

5.94 6.38

USDZAR

15.15 14.80

EURPLN

4.28 4.28


Best regards,

Investment Solutions FX Strategy team

 
 
 
 
 

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For additional informations, please contact M&C Publications / coordinator Hotline: 2300 – mcpublication@lombardodier.com.