Reports that Beijing has cancelled planned trade talks with Washington in response to the ongoing narrative from the Trump Administration to threaten further tariffs on Chinese goods has encouraged risk aversion to return at the beginning of the new trading week.
Investor sentiment towards global stocks has once again switched into a cautious stance and with a number of emerging market currencies in Asia trending lower against the Greenback, it does appear that investors are preparing for another potential escalation in global trade tensions.
While most eyes have focused on how the offshore Chinese Yuan (0.13 percent weaker) has responded to the latest developments, it is interesting to note that it is the same currencies that were exposed to repeated weakness during the emerging market volatility a few weeks back that have once again been hit the hardest. The Indonesian Rupiah, Philippine Peso and Indian Rupee are all trading more than 0.3 percent weaker at time of writing.
Officials in both India and Indonesia remain under high pressure to introduce further measures to stabilise their currencies. Bank Indonesia is under the spotlight to potentially raise interest rates later this week for the fifth time since May, while authorities in India are expected to tighten measures that would prevent imports of non-essential items into India.
I continue to hold concerns that unless there is a key breakthrough in trade tensions that the overall sentiment towards emerging markets will remain hesitant, meaning that there is still a risk that measures to shore up currencies in emerging markets will continue to not have the desired impact.
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.
The FXTM brand provides international brokerage services and gives access to the global currency markets, offering trading in forex, precious metals, Share CFDs, ETF CFDs, and CFDs on Commodity Futures. Trading is available via the MT4 and MT5 platforms with spreads starting from just 1.3 on Standard trading accounts and from 0.1 on ECN trading accounts. Bespoke trading support and services are provided based on each client’s needs and ambitions - from novices, to experienced traders and institutional investors. ForexTime Limited is regulated by the Cyprus Securities and Exchange Commission (CySEC), with licence number 185/12 and licensed by the SA FSB with FSP number 46614. Forextime UK Limited is licensed with the UK FCA, number 777911. FT Global Limited is regulated by the International Financial Services Commission (IFSC) with license numbers IFSC/60/345/TS and IFSC/60/345/APM.
Any opinions expressed here are the author’s own.
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© Opinion 2018
