Following disappointing PMIs from Europe, the euro is sliding sparking a surge in the dollar index above previous 2018 highs to its highest since June 2017. This is sparking more chaos in EM currencies led by a collapse in the Rand...

Weak EU and German PMIs (fell to a 41mth low of 52.7 in Oct) sent the euro sliding back near August lows...

And judging by the historical performance of PMIs vs EUR, there is more room to run to the downside...

 

Which in turn extended the dollar's overnight gains...

Sending the Dollar to its highest since June 2017, breaking out of the 5 month range...

Which helped spark more pain in EM currencies...

 

Led by a plunge in the rand...

The rand slumped after the government revealed a budget that disappointed, with a slightly lower GDP forecast (0.7% for 2018, 1.8% for 2019) than expected while the fiscal gap increased for 2018-19 from 3.6% to 4.0%, and up to 4.2% for 2019, which may prompt Moody's - which postponed its October 12 review - to downgrade the country.

We suspect more EM pain to come as this dollar surge re-accelerates. Is it time for the price to catch up to positioning?