Emerging-Market Assets Gain as Fed Wagers Send Dollar Lower
- Fed may start easing cycle Wednesday with 50 basis-point cut
- Brazil’s real posts best performance among emerging currencies
Emerging-market stocks climbed 0.4%, with shares in Hong Kong and Taiwan leading gains.
Photographer: Lam Yik Fei/BloombergEmerging-market assets edged higher on Monday as traders geared up for the Federal Reserve to cut interest-rates this week for the first time in four years.
An index that tracks developing nation currencies rose 0.3%, led higher by Brazil’s real, Hungary’s forint and Poland’s zloty. Meanwhile, a gauge of EM stocks climbed 0.4%, with shares in Hong Kong and Taiwan leading gains.
The risk-on sentiment comes as bond traders are debating whether Fed policymakers will cut interest rates by a quarter- or half-point on Wednesday. Mounting speculation they will decide on the larger of the two alternatives sent the dollar index to its weakest in at least eight months.
“As we begin a Fed week, much will depend on the sustainability of global risk appetite and any stronger response to the FOMC’s first cut,” BBVA strategists wrote in a Monday note. “Our base case is for a 25bp cut and limited dovishness in the revised forecast and Fed communication, which contrasts with the stronger easing path priced by markets.”
Emerging-Market Currencies Climb as Traders Bet on Fed Cuts
Brazil's real, Hungary's forint and Poland's zloty lead gains
Source: Bloomberg
Note: Data as of 12:42 p.m. New York time
Brazil’s real strengthened 1% against the greenback on Monday, leading its EM peers higher. The rally comes as traders expect policymakers led by Roberto Campos Neto to kick off a cycle of interest-rate hikes on Wednesday — a decision that is due just hours after the Fed’
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