The question of the day comes from SocGen analyst Kit Juckes, commenting on the rout we’re seeing in emerging markets:
The big issue for today though, is whether the bloodbath in EM assets and now particularly in equities, is going to spill over completely to developed markets. It looks as though it will. SPX sliding through 1600, for example, would make headlines and change market dynamics.
How do we trade all this? In FX, I still want to buy USD/CAD as EM, commodities and equities tumble. Short EUR/GBP is my short-term way of pre-positioning for a weaker euro. Europe’s chances of economic stabilisation suffer in periods of market-induced mayhem. AUD, MXN, PLN all remain sells.
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