Via Bloomberg
I came across this post on Bloomberg on the impact of the Fed rate cut on emerging currecnies. The EM currencies are set to further gain pace this year once the Federal Reserve and the ECB deliver rate cuts to help to boost an already strong 2019.
The MSCI EM currency index is currently up 2.3% this year and this is despite the fact that the Dollar Spot Index 0.7% higher. This is mainly due to the USD gains against the Euro. EM FX decoupled from the EURUSD in 2019 after the Fed stopped its hiking cycle at the start of the year. If you look at the Chart below you can see that EM FX had been tracking the Euro in the last couple of years prior to the start of the year and the Fed's shift in policy.
The Emerging markets should be supported with a US rate cut as funds shift out of the US into developing markets as investors seek a higher yield. With the Fed due to cut in July the ECB will be spurred to start fresh easing
