EM Currencies Steady as USD Loses Haven Appeal

Group 1 - The MSCI Emerging Markets Index has risen 1.2%, approaching a record close and marking the best start to a year since 2018, driven largely by gains from Taiwan Semiconductor Manufacturing Co. and other major companies like Samsung Electronics and Alibaba Group [2][3] - Emerging-market equities have experienced a bullish start to 2026, following their largest annual advance in eight years and outperforming US peers for the first time in 2025, supported by a weaker dollar and increased interest from US investors in overseas assets [3][4] - The index has advanced for seven consecutive days, with year-to-date gains reaching 3% and valuations at 13.4 times projected earnings, surpassing the five-year average of 12.3 times [5] Group 2 - Optimism regarding AI prospects for Asian companies and expectations for additional Chinese stimulus have contributed to inflows into emerging markets, as these assets are increasingly viewed as under-owned [4] - Traders are currently looking for new catalysts to sustain the upward momentum of the index, with upcoming US economic data and key earnings expected to provide insights into market health [7] - Despite the positive outlook, there are indications that the index may be in overbought territory, suggesting a potential pullback could occur [6]