The MSCI currency index fell 0.4% and is on pace for its biggest daily drop in over three months, with the South African rand and Colombian peso among the worst performers. Thailand’s baht also dropped amid the country’s border conflict with Cambodia.
“There is more optimism about the US economy as trade uncertainty eases and looking to 2026,” when the effects of President Donald Trump’s budget bill kick in, said Olga Yangol, head of emerging markets research and strategy at Credit Agricole.
Brazil’s real fell as much as 1% on Friday on a report that the Trump administration is preparing a new emergency declaration as a basis for tariffs on the country. The move, which is not yet final, would be necessary to impose Trump’s threatened 50% levy on Brazil.
Meanwhile, the MSCI emerging markets index for stocks declined 0.9%, pruning its weekly advance to 0.6%. A raft of key data next week will set the near-term course for the dollar, according to Juan Perez, director of trading at Monex USA. The greenback yesterday received a boost after Trump said that firing Fed Chair Jerome Powell wasn’t necessary.
Second-quarter GDP figures for a number of countries next week including the US “will be essential to forming a narrative for the buck in the midst of nations scrambling to attempt to finalize agreements or hoping to delay the implementation of higher tariffs,” Perez said.
In credit markets, Senegal’s bonds were among the top performers in emerging markets as the International Monetary Fund said it will start discussions with the country on a new program from next month. Pakistan’s dollar bonds and stocks rose following an upgrade by S&P Global Ratings on Thursday, with some investors expecting further gains.
