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You are here: Home > Blog > Emerging Forex – May 2018

Emerging Forex – May 2018

May 15, 2018

This month is once again particularly eventful for the emerging world.

Argentina is again under pressure with interest rates raised to 40%, the hypothesis of an aid request to the International Monetary Fund (IMF) and the Peso at its historic lows. Turkey, on the eve of the elections, will probably be forced to run for cover with a rise in rates in an attempt to defend the Lira at new absolute lows against the Dollar and the Euro. The outflows from the emerging bond world are increasing by investors with a decline in the investments of this asset now exceeding 5% from the beginning of the year.

The geopolitical tensions in Middle East have contributed to ignite the price of oil over $ 70 per barrel and this has favoured the Russian Ruble that has managed to regain some ground.



An extreme weakness on the Turkish currency as a result of a combination of geopolitical tensions in the Middle East and the forthcoming elections in June in which Erdogan will have to find some confirmations to avoid instability in a country that has been hit hard by devaluation and inflation. From a technical point of view, UsdTry has hit a historical top at 4.42 a real sell off that does not leave great expectations of a trend revers in the short term.



Thanks to the strength of the oil that rose above 70 US dollars per barrel, the Russian Ruble has recovered a lot of positions. After reaching a top at 65 due to the new sanctions imposed by the United States, UsdRub has tried in the last two weeks to bring those resistances closer, but with closures in both cases on the weekly lows. In theory, this is a good signal, but attention is still to the resistance of 65, which would make the technical situation of the Ruble quite delicate in case of a failure.



Last month, we anticipated the possibility that the Mexican Peso could get a downward pressure due to the forthcoming political elections. Four consecutive weeks of upside for UsdMxn with the support of area 18 that seems to have done its job very well. At this point UsdMxn is facing a fork: the return above 20 would feed an inevitable bullish push towards the tops, while an unfavourable change of scenario would be clearly recorded under 18.



In line with the whole emerging world, the month of April was negative for the South African Rand with the recent rise of UsdZar, which favoured a stretch over 13, not far from the transit area of ​​the bear trend in place since 2016. Also in this case UsdZar is tightly between the long-term supports and the medium-term resistances. Depending on the exit side of UsdZar it will be possible to define a strategy. At the moment, the long term bullish one is still the best.

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