China’s response to tariffs vital for EM units – City Index

US-China trade dispute could slow pace of hikes, leading to potential relief rally in EM currencies

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Emerging hope: trade tensions could slow the Fed's tightening cycle and provide relief for EM units

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Emerging markets (EM) currencies will be highly dependent on China’s response to tariffs imposed by the US on imports from the country, because in a worst-case scenario the Asian giant could opt to depreciate its currency and push yields on US Treasuries higher, says Kelvin Wong, chief technical strategist for Asia at City Index.

Aside from trade tensions, policy tightening by the Federal Reserve has already pushed real rates higher, which could trigger capital

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