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Forex pairs in this Article » EUR/USD, USD/JPY
FXstreet.com (Barcelona) - Goncalo Moreira CMT, FXStreet Technical Analyst comments that assuming that more emerging market economies will follow suit, traders continue to worry about spillover effects the rate hikes like the ones of the central banks of Turkey, India and Brazil can have on the whole hot-money misallocation.

Key Quotes

“QE in the so-called “developed” countries contributed to inflationary capital flows into emerging economies financing their growth. The plunge in emerging market assets caused a high-volume sell-off in developed stock markets all over the world.“

“Yesterday's fresh buying into the price dislocation caused some relief rallies, but markets are still waiting the FOMC's announcement since further tapering will interpreted as a warning to EM bears to readjust positions and their portfolios away from EMs and into more developed economies.”

“We can follow the mentioned flight to quality into government bonds which are staging a bottom as seen here in the 10-Year Treasury price chart compared to the S&P 500. Volatility as been expanding in all asset classes, so commodities jumped and outperformed stocks as well as seen in the ascending S&P-Gold ratio.”

“On the intraday, the safe haven play is currently dominating, with the rally in the TRY faltering and risk currency pairs like USD/JPY and AUD/USD drifting lower.”
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