FX muted as dollar firms, rate decision flurry on tap
ECB rate decision at 1215 GMT
Rate decisions in Turkey, Chile and Egypt later in the day
EM stocks down 0.6%, FX off 0.1%
By Shashwat Chauhan
Oct 17 (Reuters) -Most emerging market currencies were muted on Thursday, as the dollar firmed on prospects of smaller U.S. rate cuts and better odds of Donald Trump - whose policies are seen boosting the greenback - prevailing in the upcoming presidential elections.
Trade was cautious ahead of interest rate decisions in the euro zone, Turkey, Egypt and Chile.
Most currencies in Central Eastern Europe weakened ahead of a widely expected interest rate from the European Central Bank at 1215 GMT.
"Futures are fully discounting a 25 basis point rate cut, so market reactions should be small unless the ECB changes something in its guidance for future interest rates," Karl Steiner, head of analysis at SEB wrote in a note.
Turkey's lira TRYMTOM=D3 slipped 0.1% against the dollar ahead of a local interest rate decision, with analysts expecting the central bank to hold rates at 50%.
Rate decisions in Chile and Egypt are also on investors' radar later in the day.
Currencies in emerging Asia and Africa were under pressure as the greenback firmed. South Africa's rand ZAR=D3 fell 0.5%, while the Chinese yuan CNH= was down 0.1% in offshore trading.
A broader gauge of EM currencies .MIEM00000CUS was down 0.1%. FRX/
The greenback has strengthened as signs of U.S. economic resilience have caused traders to scale back their expectations of Fed rate cuts.
Analysts also attribute the dollar's strength and EM weakness to the likelihood of a Trump victory, whose trade policies call for pricey tariffs on goods from rivals and allies alike.
"This may be hard to shake off given such a tight election," strategists at ING noted.
Later in the day, a U.S. retail sales reading and jobless claims data could set the tone for market expectations around the Fed's rate path.
MSCI's index for emerging market stocks .MSCIEF dipped 0.6% by 0835 GMT, as heavyweight Chinese .SSEC, .CSI300 and Hong Kong .HSI slipped around 1% each as newly announced measures for the embattled property sector failed to impress.
China will expand a "white list" of housing projects eligible for financing and increase bank lending for such developments to 4 trillion yuan ($562 billion) by year-end.
"The strong pledge is welcome. However, this number likely includes credit lines and extension of existing loans, thus not exactly all in new lending to be extended very quickly," Societe Generale strategists noted.
HIGHLIGHTS:
** Vietnam central bank says Vietcombank, MBBank to take over smaller lenders
** TSMC bullish on outlook as AI boom blows Q3 profit past forecasts
** Hungarian GDP growth will be close to zero in Q3, economy minister says
For GRAPHIC on emerging market FX performance in 2024 http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2024 https://tmsnrt.rs/2OusNdX
Reporting by Shashwat Chauhan in Bengaluru
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
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