Currencies slip as dollar firms; focus on more data, rate decisions

EMERGING MARKETS-Currencies slip as dollar firms; focus on more data, rate decisions

By Shashwat Chauhan

May 8 (Reuters) –A gauge of emerging market currencies came under pressure on Wednesday as the US dollar resumed its charge upwards, while Poland’s zloty slipped in the lead up to an interest rate verdict later in the week.

By 0820 GMT, MSCI’s index for emerging market currencies .MIEM00000CUS shed 0.2%, set to snap a five-day winning streak.

Most currencies in Central Eastern Europe traded in a tight range owing to a lack of catalysts, with Hungary’s forint EURHUF= dropping 0.2% against the euro, while the Czech crown EURCZK= also lost 0.2%.

Poland’s zloty EURPLN= lost 0.4% against the euro ahead of a central bank rate decision on Thursday, where it is widely expected to hold rates steady at 5.75%.

South Africa’s rand ZAR= slipped 0.5% against the dollar as the greenback firmed, while Israel’s shekel ILS= also shed 0.5% after rising over 1% in the previous session. FRX/

A broader gauge of EM stocks .MSCIEF also dipped 0.3%, on track to log its first single-day decline in five, following a near 1% fall in EC heavyweights China and Hong Kong. .SS

Johannesburg shares .JTOPI slipped 0.2% early on, on track to snap a four-day winning streak, while shares in Hungary .BUX shed 0.3%.

Risk assets have rallied recently while the dollar has been pinned lower amid lingering hopes the US Federal Reserve would cut interest rates sometimes this year, following a soft jobs report last week.

“Risky assets have retraced the sell-off in recent days and are not far from the highs seen a couple of weeks ago. We are still in the bullish camp for risky assets,” said Mohit Kumar, chief economist Europe at Jefferies.

“A positive economic backdrop and central bank put on the table creates a positive environment for risky assets.”

Investor focus would now shift to unemployment data in the Czech Republic and Turkey, along with an inflation reading in Hungary due later in the week.

A key measure of world indebtedness has resumed its climb as global debt hit a record high of $315 trillion in the first quarter of the year, fueled by borrowing in emerging markets, the United States and Japan, a study showed.

Later in the day, Brazil would be on the spotlight amongst emerging markets as its central bank is widely expected to cut interest rates by 25 basis points.

HIGHLIGHTS:

** South Africa’s net foreign reserves rise to $57.851 billion in April

** Hungary’s March output fell by 10.4% y/y

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For the CENTRAL EUROPE market report, see CEE/

For the TURKISH market report, see .ICE

For the RUSSIAN market report, see RU/RUB

Reporting by Shashwat Chauhan in Bengaluru; Editing by Andrew Cawthorne