From the FXWW Chatroom – Emerging market ETFs moved nearly 2% higher despite the Fed rate hike and fairly hawkish forward guidance in the dot-plots [nL1N1441IT]. Investors have been selling EM assets for almost a year, partly on Fed hike expectations, so some profit-taking on shorts is not surprising now that we finally have lift-off. China concerns and falling commodity prices are the other main factors behind EM selling in 2015 and the near-5% drop in NYMEX crude Wednesday could cap EM gains in the short term. AUD/USD has been resilient in the face of USD buying against the other majors due to its close correlation with EM sentiment. If the rally in EM ccys/ assets continues, along with a “Santa Claus rally” in equity markets – buying AUD against JPY and/or EUR might appeal to investors looking to remain USD-neutral into year-end. [IFR]
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