Emerging Currencies Rebound as Jobs Data Spur Dollar Weakness

Emerging-market currencies rallied after weaker-than-expected US jobs data prompted traders to price in Federal Reserve rate cuts, driving the dollar lower.

MSCI’s EM currency gauge rose 0.5% on Monday, the most in more than a month. The Bloomberg Dollar Spot was little changed after sliding 0.9% in the previous session. The Philippine peso and Malaysian ringgit outperformed with gains of about 1% against the greenback.

Emerging-market assets are getting a reprieve after being pressured last week by a of new tariffs announced by President Donald Trump. The MSCI currency index fell for six straight sessions before Monday’s rebound. Investors are betting that the Fed may lower interest rates as soon as next month, following surprise weakness in US payrolls

“If the Fed resumes rate cuts in September and signals a more dovish policy stance, it could potentially offer support to Asian currencies,” MUFG Bank’s currency strategist Lloyd Chan wrote in a note. Risks for the regional FX might come from the implementation of higher US tariffs that could weigh on exports, he added.

Sentiment was more subdued for equities after Friday’s sharp retreat on Wall Street — sparked by rising US unemployment and slower job creation. Stock benchmarks in Indonesia, the Philippines and Malaysia all fell. The MSCI EM equity benchmark edged up 0.3%, boosted by South Korean and Chinese tech heavyweights.