News on the earnings front has been mostly positive, while expectations regarding future ECB decisions appear to be shifting towards a “more dovish stance”, which has given global equities some support, which has in turn helped put the break to EMFX declines. In the LATAM space, despite an important decline in some commodities, appetite for yield has apparently limited FX downside. Given lingering concerns over growth, our “favorite LATAM FX” for the near term is BRL, where we see limited downside appetite due to inflation problems and an attractive carry.
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Scotiabank