Economists at Wells Fargo continue to believe the best opportunities for currency strength and outperformance exist in emerging markets.
The most attractive yield opportunities continue to be found in the emerging market
We continue to believe the best opportunities for currency strength and outperformance exist in emerging markets; however, we have become slightly less constructive in the short term.
With the Fed tightening further and China's economy decelerating, we believe emerging market currencies can pause the current strengthening trend and hover around current levels through the end of this year. In fact, we would not be surprised if a sharp, but short-lived, sell-off across the emerging markets currency spectrum unfolded in the near future. This sell-off would likely not last long, and markets would re-focus on the fundamentals associated with EM currencies.
While the global growth outlook may be peaking combined with select institutions considering policy rate cuts, the most attractive yield opportunities continue to be found in emerging markets. In our view, attractive carry, especially during times of subdued volatility in currency markets, can result in capital flows toward emerging markets, and combined with broad Dollar depreciation, can support developing currencies over the longer-term.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD depreciates following PPI, China Manufacturing PMI
The Australian Dollar edges lower against the US Dollar following two days of gains, as Australia's mixed PPI data for the third quarter was released on Friday. However, expectations of a hawkish stance from the Reserve Bank of Australia continue to support the Aussie Dollar, limiting losses in the AUD/USD pair.
USD/JPY weakens below 152.00, US NFP data in focus
The USD/JPY pair softens to around 151.95 during the Asian trading hours on Friday. The Japanese Yen edges higher after Bank of Japan Governor Kazuo Ueda’s remarks, which were interpreted as heightening the chance of a rate hike in December.
Gold price gains ground as traders brace for US NFP data
Gold price recovers some lost ground on Friday. The uncertainties surrounding the US presidential election and the ongoing geopolitical tensions in the Middle East provide some support to the precious metal, a traditional safe-haven asset.
TON set to launch synthetic Bitcoin to boost its DeFi solutions
TON revealed its plan on Thursday to launch a synthetic Bitcoin token on its blockchain, allowing users to trade, stake, and earn yield using BTC. Following the announcement, TON is down over 3%.
Bank of Japan holds rates steady amid signs of modest GDP growth
Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.