FX, stocks subdued as investors monitor trade developments, rate decisions

Mint

28-07-2025

US agrees deal for 15% EU tariff; talks to resume with China
Fitch upgrades rating on Turkey
Interest rate decisions in US, South Africa this week
MSCI EM stocks, FX indexes muted
By Ankita Yadav and Purvi Agarwal
July 28 (Reuters) - Most emerging market currencies moved lower and stocks were little changed on Monday, as investors shifted their attention to a slew of central bank decisions and U.S. economic data while monitoring trade negotiations ahead of the August 1 deadline.
The U.S. struck a framework agreement with the European Union on Sunday, imposing a 15% tariff on most EU goods, less than half of the initial proposed rate.
"The deal is better than the 30%-50% tariff rates threatened over the last couple of months, although it is probably as bad as the universal tariff rates being discussed late last year," said Chris Turner, global head of financial market research at ING.
"But given that a deal close to this one was heavily rumoured last week, it may be no surprise then that FX markets have not done much overnight."
The dollar index, that logged declines last week, was trading up 0.5%, pressuring most EM currencies.
Many currencies in Asia weakened against the dollar, while South Africa's rand was down 0.6%.
The lira was little changed. Credit ratings agency Moody's upgraded Turkey's rating to "Ba3" from "B1" on Friday, citing improving monetary policy credibility, easing inflation and reduced economic imbalances.
Currencies in emerging Europe were largely muted against the euro, with the most significant move being a 0.3% drop in the Polish zloty.
Separately, the U.S. and China were looking to extended their tariff truce by another 90 days, ahead of China's August 12 deadline, paving the way for trade talks to resume between the countries.
Trade optimism, after the U.S. clinched deals with Japan and other trading partners, had allowed investors to take on more risk last week, with MSCI's measures of currencies and stocks logging weekly gains.
Interest-rate decisions in the U.S., Brazil, South Africa, among others, and a barrage of U.S. economic data, including payrolls and the personal consumption expenditure, will set the tone for markets this week.
Investors will be watching for any indications of U.S. President Donald Trump's tariffs impacting the world's biggest economy, after an inflation report earlier this month showed some signs of tariff pass-through.
MSCI's EM currency gauge was down 0.2%, while the stocks measure was down 0.1%. Stocks in Poland fell 0.8%, while they were down 0.6% in Turkey.
These declines were limited by gains in Hungarian stocks , up 0.1%, and many heavyweight Asian equities.
South African stocks were flat.
Meanwhile, the International Monetary Fund's executive board completed a fifth review of Zambia's loan programme, unlocking another $184 million disbursement for the country.
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For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see (Reporting by Ankita Yadav and Purvi Agarwal in Bengaluru; Editing by Shilpi Majumdar)