An MSCI Inc. gauge for developing-nation currencies was little changed as of 1:00 p.m. in New York, still on track for its best week since late January. The Czech koruna and Hungarian forint posted the sharpest gains in a basket of peers tracked by Bloomberg, while South Africa’s rand slumped amid President Donald Trump’s renewed criticism of the country’s policies.
The US economy “is fine” and the costs of being cautious are very low, Powell said at an event Friday, acknowledging uncertainty around policy changes. Nonfarm payrolls increased 151,000 in February, a bit less than economists expected but a bit more than the market whisper number suggested.
“Global growth can perhaps continue while the economic outlook for the US is comprehensibly in doubt,” said Juan Perez, director of trading at Monex USA.
Speculation that a slowdown in the US economy will divert investment flows into other markets has been shoring up emerging markets this year. Eastern European names like the forint and the Polish zloty are up more than 4.5% this week on prospects for increased spending across the region, while investors expect policymakers in both countries to remain hawkish.
The latest US jobs data “aren’t enough to change the weak dollar narrative, which seems to be the path of least resistance now,” said Win Thin, global head of markets strategy at Brown Brothers Harriman.
Mexico’s peso whipsawed amid a fresh wave of headlines on US levies. The currency weakened earlier in the session after Trump said that tariffs on Mexico and Canada could go higher than a 25% rate imposed earlier this week.
In Brazil, swap-rate contracts slumped amid weaker-than-expected economic growth. Both Bank of America and hedge fund manager Legacy Capital are touting bullish positions in ratesand local bonds.
Stock Rally
An index of emerging-market stocks is on track for its best week since September amid an artificial intelligence-related rally in China and as Trump delayed some of his tariffs. “EM stocks have proven resilient to this week’s tariff headlines,” said Nenad Dinic, EM equity strategist at Julius Baer in Zurich. “And comments from Mexican President Sheinbaum
that tariffs can be avoided are promising signs that tensions may not escalate into a full-blown trade war.”
The rally in Chinese stocks has room to run, even after Julius Baer’s index targets were reached this week, Dinic said. “After a strong run in technology, it is likely to see some rotation to laggards such as consumer sectors and financials,” he said.
Elsewhere, Kazakhstan’s central bank unexpectedly hiked its key interest rate to help tame accelerating inflation that’s running at almost double the target. The National Bank of Kazakhstan raised the benchmark to 16.5% on Friday.
