In other words, they expect a stronger dollar narrative to prevail
The firm is downgrading their view on emerging market (EM) FX for the second time in two weeks, expecting another 4-5% drop given the current market landscape.
The MSCI EM currency index fell by 0.7% at the lows today and was poised for its biggest daily drop since March last year, only to recover a little upon testing the key support.
That highlights the dollar’s standing right now in the market and how vulnerable other currencies, including EM currencies, are to the recent resurgence in the greenback.
Some food for thought from earlier today: