Emerging Market (EM) currencies found their footing this week as the dollar faded. Although markets are expecting more details around QE tapering (which would theoretically support dollar strength), other factors such as a less hawkish stance from the Fed’s Kaplan (Dallas head), weaker than forecasted U.S. Manufacturing PMI data yesterday as well as the rebound in commodities all allowed for a ‘risk-on’ mood in financial markets this week.
The South African rand is no exception but sentiment could easily shift back to the greenback as the Jackson Hole Symposium approaches. Profit taking on the dollar was a likely contributor to USD outflows which again should not be taken as sustained dollar weakness.
