Emerging market currencies hit longest winning streak since 2007

Emerging market stocks and currencies climbed on Friday as investors pulled back expectations of a Federal Reserve interest-rate hike this month, extending a broad rally across the asset class that has now stretched currencies to their longest winning streak in nearly two decades.

The MSCI Emerging Markets Stock Index jumped as much as 1.1%, its best session in more than a week, while the MSCI Emerging Markets Currency Index rose 0.4% on the day, according to Bloomberg. The currency gauge was on track for a tenth consecutive weekly advance — its longest such run since 2007.bloomberg+1

Waller's Comments Shift Rate Expectations

The rally was sparked by Fed Governor Christopher Waller, who said overnight that he would favor keeping rates unchanged at the September 16 policy meeting if upcoming inflation reports reinforce signs of disinflation. Swap contracts tied to the September meeting now imply roughly even odds of a quarter-point increase, down from about 70% earlier in the week.moneyweb

New York Fed President John Williams reinforced a similar message, noting that evidence shows inflation is continuing to decline as the impact of tariffs fades.news.futunn

Asian Markets Lead the Charge

Singapore's Straits Times Index climbed as much as 1.3% to a record 5,820.69 points, led by blue-chip banks. Tech-heavy South Korea and Taiwan gained 1.8% and 1.5% respectively, while the Philippine benchmark rose 2.3% for its best week since mid-June after inflation there slowed for a fourth consecutive month.theedgemalaysia

The dollar's retreat supported Asian currencies broadly, with the South Korean won leading gains at 0.4%. Strong U.S. nonfarm payrolls data released Friday briefly boosted the dollar, but currencies including the South African rand and Mexican peso quickly recovered their losses.news.futunn+1

All Eyes on CPI

Market attention has now shifted to next week's U.S. consumer price index report. Marco Oviedo, a strategist at XP Investimentos, said the jobs data "confirms that CPI is the truly critical data point," adding that if core inflation declines as expected, "a pause in Federal Reserve rate hikes is almost certain".news.futunn

Risks remain, however. Brent crude futures headed for their biggest weekly gain since July amid renewed U.S.-Iran hostilities, raising concerns about energy supply disruptions. "We always need to be very sensitive to Iran and oil going into the weekend," said Charu Chanana, chief investment strategist at Saxo Markets.moneyweb