Flash: EM fears dominate Asia sentiment - Danske Bank

FXstreet.com (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes that the emerging markets (EM) worries fuelled last week by a series of events in Argentina, Turkey, Thailand, South Africa and Ukraine alike topped by a disappointing Chinese PMI have continued to dominate sentiment in Asian trading overnight.

Key Quotes

“December Bank of Japan (BoJ) minutes released this morning did little to change that and in fact revealed that BoJ members were indeed wary of the effects of Fed tapering on EM ahead of New Year.”

“The decisive factor for whether the EM sell-off will continue into this week could be how the authorities handle the fact that China could face the first ever default on a trust product this week.”

“At this point, we see little chance of the Fed diverging from its tapering path or current forward guidance at Wednesday’s meeting.”