MSCI’s emerging-market currency index, which had slumped earlier in the session following four days of losses, edged up to eke out an advance. Brazil’s real led the gains.
Fresh data signaling some stabilization in the job market “gives the Fed a green light to keep cutting rates,” according to Brendan McKenna, EM economist and FX strategist at Wells
Fargo Securities in New York. ADP figures are offering one of the few monthly snapshots of the labor market as the longest government shutdown in US history delays the releases ofofficial economic data.
“Some of that uncertainty being lifted places some downward pressure on the dollar and is still supportive of EM carry currencies,” he said.
A gauge for emerging-market stocks, meanwhile, fell 0.6%, to its lowest level since Oct. 23, with tech companies leading losses.
US elections in the rear view relieves some tensions and could pave the way for “more bipartisan dealings as well as less unilateral action causing turbulence across market classes,” according to Juan Perez, senior director of trading at Monex.
“For now, the sentiment is conducive for risk-taking and that’s benefitting EM while debilitating the dollar,” he said.
In credit, Nigeria launched a $2.347 billion debt offering in two parts; and Republic of Congo has wrapped a $670 million bond in the country’s first international debt offering in almost two decades.
Elsewhere, Poland’s central bank cut interest rates to the lowest level in three-and-a-half years as a surprise decline in inflation outweighed concerns over loose government spending.
And Brazil’s central bank will likely keep its interest rate unchanged at nearly a two-decade high again on Wednesday.
