EM ended the week on a firm note, with markets digesting what they perceived as a dovish Fed bias. We disagree, and continue to believe that markets are underestimating the Fed’s capacity to tighten this year. EM FX could continue gaining some traction if the dollar correction continues, but we think US interest rates will ultimately move higher and put pressure on EM once again.

Caixin reports China January composite and services PMI readings Monday.  Last week, official services PMI reading ticked higher to 54.6, so there are small upside risks to the Caixin data. Note, however, that manufacturing PMI readings fell from December so the overall economic outlook is mixed. January trade will be reported Friday, with export seen rising 3% y/y and imports 9.6% y/y.

Czech Republic reports December retail sales Monday, which are expected to rise 6.2% y/y vs. 8.6% in November.  It then reports December trade, industrial and construction output Tuesday. January CPI will be reported Friday, and is expected to rise 2.1% y/y vs. 2.0% in December.

The Philippines reports January CPI Tuesday, which is expected to rise 2.8% y/y vs. 2.6% in December.  Last week, we saw higher than expected CPI prints for Korea, Taiwan, Thailand, and Indonesia and so we see upside risks for the Philippines. The central bank then meets Thursday and is expected to keep rates steady at 3.0%. December trade will be reported Friday, with exports seen rising 3.5% y/y and imports 10% y/y.

Hungary reports December IP Tuesday, which is expected to rise 0.4% y/y vs. 0.6% in November.  Central bank minutes will be released Wednesday. December trade will be reported Thursday. The economy remains robust, and we think rising price pressures could limit or even prevent further easing at the March meeting. That is when the central bank will decide if it will make another adjustment to its borrowing facility.