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Forex pairs in this Article » USD/CHF, USD/JPY (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes that so far, the reaction to the EM sell-off among the majors has not been particularly USD-positive as one might have expected – traditional safe-havens such as JPY and CHF have gained.

Key Quotes

“IMM data suggest that speculators turned to these two currencies already ahead of the meagre Chinese PMI release; notably MXN suffered a move in which investors went from being net long to net short in the week to 21 January.”

“The lack of USD upside may suggest that markets are to a certain extent pricing the chance of a Fed reaction (more easing) should global growth end up taking a hit from a wider EM crisis; in contrast, an ECB reaction should possibly not be expected in such a scenario.”

“With only the German IFO a potential market mover, focus today will likely stay on ‘what’s next?’ in the EM FX sphere.”
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