Indeed, we think it is too early to throw in the towel on the short EM FX trade. Enough risks (both idiosyncratic and global) remain in play to make us reluctant to go long EM FX now. That said, we see pockets of divergence due in part to monetary policy trajectories. For instance, we think Asia and Eastern Europe are likely to outperform on central bank hawkishness, while Latin America is likely to underperform on central bank dovishness.
Latin America
Brazil: USD/BRL retraced about half the September-November rise before bouncing higher. Using that rise, the major retracement objectives come in near 3.2370 (38%), 3.2070 (50%) and 3.1770 (62%). The 200-day MA comes in near 3.1845.
Chile: USD/CLP has not retraced any of the September-November rise and made a new cycle high today near 645. Using the July-September drop, the last major retracement objective comes in near 647.45 (62%). Break of that would target the July high near 668. The 200-day MA comes in near 650.
Colombia: USD/COP has retraced about a third of the September-November rise. Using that rise, the major retracement objectives come in near 3007 (38%), 2984 (50%) and 2961 (62%). The 200-day MA comes in near 2956.
Mexico: USD/MXN has retraced about half of the September-November rise. Using that rise, the major retracement objectives come in near 18.4920 (50%) and 18.2840 (62%). The 200-day MA comes in near 18.49.
Peru: USD/PEN has nearly retraced the entire September rise. Break of the September low near 3.2270 would target the September 2015 low near 3.1825 and then the March 2015 low near 3.0565. The 200-day MA comes in near 3.2535.
EMEA
Czech Republic: EUR/CZK has not really traded with the rest of EM after the floor was removed. The pair is on track to test the December 2012 low near 25.03 and then the September 2012 low near 24.278. The 200-day MA comes in near 26.264.
Hungary: EUR/HUF hardly retraced any of the August-November rise. Using that rise, the major retracement objectives come in near 309.50 (38%), 308 (50%), and 306.50 (62%). The 200-day MA comes in near 309.
Poland: EUR/PLN has retraced the entire September-November rise and made a new cycle low yesterday. Break below 4.20 sets up a test of the May low near 4.16 and then the July 2015 low near 4.10. The 200-day MA comes in near 4.2455.
Israel: USD/ILS has nearly fully retraced the October-November rise. Break below the October low near 3.48 would set up a test of the July 2014 low near 3.40. The 200-day MA comes in near 3.5720.
Russia: USD/RUB has retraced over half of the September-November rise. Using that rise, the major retracement objective comes in near 58.70 (50%) and 58.25 (62%). The 200-day MA comes in near 58.13.
South Africa: USD/ZAR has retraced about half of the September-November rise. Using that rise, the major retracement objectives come in near 13.6570 (50%) and 13.44 (62%). The 200-day MA comes in near 13.3125.
Turkey: USD/TRY has not retraced much of the September-November rise and made a new all-time high last week near 3.9825. The top of a steep upward sloping channel dating back to mid-August comes in near 4.15 currently. Using the September-November rise, the major retracement objectives come in near 3.7560 (38%), 3.6860 (50%) and 3.6160 (62%). The 200-day MA comes in near 3.6140.
Asia
China: USD/CNY has retraced about a quarter of the September rise. Using that rise, the major retracement objectives come in near 6.59 (38%), 6.5610 (50%), and 6.5320 (62%). The 200-day MA comes in near 6.76.
Hong Kong: The USD/HKD peg at 7.80 will remain in place for the foreseeable future, as will the 7.75-7.85 trading band. In August, the pair traded at its highest level since January 2016. The high that month came in near 7.83. The pair has since drifted lower to trade around 7.81 currently.
India: USD/INR has retraced about two thirds of the September rise. Break below the September low near 63.7860 would set up a test of the August low near 63.5675. The 200-day MA comes in near 64.86.
Indonesia: USD/IDR has retraced about a quarter of the September-October rise. Using that rise, the major retracement objectives come in near 13451 (38%), 13389 (50%), and 13327 (62%). The 200-day MA comes in near 13369.
Korea: USD/KRW has retraced the entire September rise and made a new cycle low yesterday. Break below the May 2015 low near 1065 would set up a test of the July 2014 low near 1008. The 200-day MA comes in near 1129.
Malaysia: USD/MYR has retraced the entire September rise and made a new cycle low yesterday. The pair is on track to test the August 2016 low near 3.9835 and then the July 2016 low near 3.9325. The 200-day MA comes in near 4.30.
Philippines: USD/PHP has retraced the entire September-October rise and made a new cycle low yesterday. Break of the August low near 50.15 would set up a test of the June low near 49.34. The 200-day MA comes in near 50.53.
Singapore: USD/SGD has retraced about two thirds of the September-October rise. Break of the September low near 1.3345 would set up a test of the May 2015 low near 1.3150. The 200-day MA comes in near 1.3760.
Taiwan: USD/TWD retraced the entire September-October rise before drifting higher. Break below the November low near 29.88 would set up a test of the October 2013 low near 29.29. The 200-day MA comes in near 30.30.
Thailand: USD/THB has retraced the entire September-October rise and made a new cycle low yesterday. The pair is on track to test the July 2014 low near 31.74. The 200-day MA comes in near 33.80.
