JPMorgan has downgraded their view of EM FX after yesterday upside surprise in US CPI sparked a reassessment of the Fed's rate path.

The surprise led markets to reprice their expectations towards September as the first possible cut for the Fed.

In response to this, JPMorgan said:

That is the point at which the probability of no (Fed) cuts becomes sufficiently likely for markets to reprice, moving risk-free rates even higher and limiting the ability of EM currencies to perform or EM rates to keep resisting the move higher

The bank has moved back to market weight from overweight in EM FX.