In last week’s EM Rundown we explored which EM currencies were most vulnerable to a potential Grexit, and while a Greek exit from the Eurozone looks more likely than ever, there is a much bigger risk for EM FX emanating from China, whose economy is roughly 40 times larger than that of Greece.
As most forex traders know by now, the negotiations over Greece’s debt took a sharp turn for the worse over the weekend, culminating in the Greek government’s decision to call a public referendum on its creditors’ proposal on this coming Sunday.
Nearly two years ago, then-Fed Chairman Ben Bernanke (remember him?) suggested that the Federal Reserve was planning to gradually reduce the pace of its quantitative easing, a process that quickly became known as “tapering.”
It’s been an interesting start to what promises to be a interesting week in the forex market. The biggest story of Monday’s trade thus far has been the continued strength of the dollar despite disappointing data in the world’s largest economy.