High food and energy prices continue to squeeze households globally. Aggressive monetary policy responses and shrinking real incomes have increased global recession risks. Major markets are expected to see violent moves as these markets continue to struggle to find a reliable and sustainable macro outlook to trade on.
Against a challenging global backdrop, emerging markets are also likely to remain under pressure. For much of the first half of 2022, high interest rates and rising commodity prices helped these several EM currencies outperform their peers. However, broad-based dollar strength has slowly but surely eaten away at those EM FX gains and this is likely to continue as the Fed remains on its aggressive tightening path.
In our latest FX Quarterly, we set out what the geopolitical and macro-economic landscape means for major and emerging markets in the third quarter.