Mercados Emergentes
Slowing manufacturing PMI indices globally indicate the slowdown in economic activity will persist. Manufacturing demand for commodities will also soften, weighing on industrial commodity prices. Geopolitical tensions and the race to the green energy transition will upend enmeshed global supply chains, which will also impact manufacturing activity. It is possible that stimulus in China will arrest the decline in the state’s manufacturing activity, which will have positive spillover effects to its key trading partners.
Following this weekend’s OPEC 2.0 meeting, KSA announced a 1mm b/d crude output cut, slated for this July or August, as it attempts to support weak oil prices. The new output quotas, reduced to reflect members’ weak crude oil production will continue until end-2024. UAE’s quota was the only one raised in acknowledgement of its higher production capacity. On the back of this announcement, we continue to expect brent prices will average $90/bbl this year.
In this short weekly report, we review some of our favorite FX trades.