EM FX came under greater pressure last week as the situation in Turkey deteriorated. With no weekend developments as of this writing, we expect Turkish assets to remain under pressure this week.

The five worst EM currencies YTD are TRY (-41%), ARS (-36%), RUB (-15%), BRL (-14.5%), and ZAR (-12%). All five have serious baggage that warrants continued underperformance. Yet it’s worth noting that the five best are MXN (+4%), COP (+1.5%), MYR (-1%), PEN (-1.5%), and THB (-2%).Yes, we are in a broad-based EM bear market but investors are not selling indiscriminately. 

China reports July retail sales and IP will be reported Tuesday. IP is expected to rise 6.3% y/y while sales are expected to rise 9.1% y/y. For now, policymakers are likely to wait several months to gauge the impact of recent stimulus measures. 

Israel reports June trade Monday. It reports July CPI Wednesday, which is expected to rise 1.6% y/y vs. 1.3% in June. If so, it would be the highest rate since December 2013. Next central bank policy meeting is August 29. No change is expected then but we think the bank will start the tightening cycle in Q4. Q2 GDP will be reported Thursday, which is expected to grow 2.4% SAAR vs. 4.7% in Q1. 

Poland reports June trade and current account data Monday. Q2 GDP will be reported Tuesday, which is expected to grow 5.1% y/y vs. 5.2% in Q1. This would be a disappointing reading given the low base effect from 2017. This would support the stance of the central bank doves, though we think rising inflation warrants tightening. The next policy meeting is September 5, no change expected then. 

India reports July CPI Monday, which is expected to rise 4.47% y/y vs. 5.0% in June. July WPI will be reported Tuesday, which is expected to rise 5.24% y/y vs. 5.77% in June. We believe this is a temporary drop in inflation, and the central bank will retain its hawkish bias. The next policy meeting is October 4. It’s too early to make a call now as the decision will be data-dependent.