An MSCI Inc. gauge for developing-nation currencies slipped 0.1% as of 9:45 a.m. in New York Friday. Low-yielding currencies, such as the Indonesian rupiah and Philippine peso, were among the worst performers in a basket of 23 exchange rates tracked by Bloomberg.
Emerging-market stocks erased early losses to trade little changed and remain on track for their second straight week of gains.
US retail sales rose 0.5% in July from a month earlier, Commerce Department data showed Friday, falling short of the estimated 0.6% increase. Previous data was upwardly revised.
Signs that growth is slowing in China have raised concerns about the outlook for Asia’s largest economy as investors keep an eye on spillovers from Donald Trump’s tariffs. Factory
activity and retail sales for the month of July disappointed, while outstanding loans contracted for the first time since 2005.
Economies in Asia are especially vulnerable to a further slowdown in China, given that it is the largest trading partner of Malaysia, Thailand, the Philippines, South Korea and Indonesia, according to 2024 data from the International Monetary Fund.
Later today, Trump and Putin are expected to meet in Alaska, with the former seeking a ceasefire in Ukraine and the latter trying to avoid making any concessions on the war.
“If the Alaska meeting yields in some sort of ceasefire or peace-deal on the table, expect Euro along with other EM currencies to rise plenty,” said Juan Perez, senior director of trading at Monex USA.
Investor focus will gradually shift to the upcoming Jackson Hole economic symposium as money managers look for clues on the path for the Federal Reserve. Expectations of interest-rate cuts from the Fed have been propelling developing-nation assets this month, with traders pricing in a little less than 90% chance of a quarter-point reduction in borrowing costs in September.
“The dollar can keep weakening heading into Jackson Hole,” said Alvaro Vivanco, head of strategy at TJM FX. Investors have poured money into EM-dedicated debt funds for the past 17 straight weeks, adding $2.9 billion in the week through Aug. 13, according to the latest EPFR Global data compiled by Bank of America Corp.
