SigmaForex Advices

Emerging financial markets frequently track swings in advanced economy stocks. However, the close relationship between Emerging Market (EM) currencies and the S&P 500 broke in October 2007 with virtually no sign of repair since.In 2H 2008, emerging market currency strategies will likely benefit from adhering to two main tenets1) pursuit of relative value and 2) timing the Fed’s need to normalize its monetary stance.The EM trade recommendations have been skewed to relative value or an adherence in long positions, where central banks have the willingness, ability and need to reduce local inflation pressures.The second factor will likely appear at a later stage during the year, when market expectations shift toward a Fed needing to more actively neutralize its monetary stance. At that point, high yielding currencies will likely experience a temporary setback.

More.....