Trump’s BRICS warning shines light on emerging FX – Dec 2

1. Index	Last	Change	% Change
   trading lower Nikkei Index .N225	38,089.52	-118.51	–0.31%Negative
   trading higher Hang Seng Index .HSI	19,662.91	+239.30	+1.23%Positive
   trading higher S&P BSE SENSEX Index .BSESN	79,802.79	+759.05	+0.96%Positive

Source: LSEG, opens new tab – data delayed by at least 15 minutes

Global market spotlight on Monday looks set to zoom in on the dollar, especially its performance against emerging market currencies, after U.S. President-elect Donald Trump’s weekend warning against the so-called ‘BRICS’ nations.

This comes after Trump had already injected additional volatility into world currency markets last week by proposing big tariffs against China, Mexico, and Canada – countries the US has some of its largest trade deficits with.

The dollar’s path on Monday will be fascinating to observe. It snapped an eight-week winning streak last week with its steepest weekly fall since mid-August, as U.S. rate cut expectations cooled and Treasury yields fell.

But much of the dollar’s downward momentum last week was down to its weakness against the euro and yen. It has been much firmer against other G10 currencies – not least the Canadian dollar – and especially emerging and Asian currencies.

Encouraging signs from China that the raft of stimulus and support measures from Beijing in recent months may be beginning to bear fruit.

A private survey on Sunday showed that new home prices in China rose at a year-on-year rate of 2.40% in November versus 2.08% in October. And on Saturday, China’s official purchasing managers index data showed that factory activity expanded modestly for a second straight month in November, and at its fastest pace in seven months.

For more news visit Reuters.com