Global Market Dynamics Amid Fed Decision and China Slowdown

Emerging market currencies stagnated as investors awaited the U.S. Federal Reserve's rate decision, while China's underwhelming retail sales depressed Asian markets. The slowdown in China, the world's second-largest economy, has exerted pressure on emerging assets despite the Fed's easing policies. Key focus remains on the Fed's future guidance.

Emerging market currencies saw little change on Monday as investors remained watchful for the U.S. Federal Reserve's upcoming rate decision. This comes amid disappointing Chinese economic data that cast a shadow over Asian markets. China reported a mere 3% year-on-year increase in retail sales for November, missing the anticipated 4.6% rise.

The sluggish growth in China has resulted in a downturn for emerging market assets, particularly in Asia, despite the Federal Reserve's ongoing interest rate cuts. China's CSI300 dropped by 0.5%, while the Shanghai Composite dipped by 0.2%. FX trader Charlie Bird noted that Africa and other emerging markets could face adverse effects from any U.S.-China trade tensions.

Investors are particularly keen on the Federal Reserve's guidance for future rate adjustments set to extend into 2025. Elsewhere in Europe, Slovakia suffered a credit rating downgrade due to political challenges, while Senegal in Africa and Ghana's new President-Elect focused on financial stability through IMF programs. Israel and India's economic indicators offered mixed signals, impacting their respective markets.

(With inputs from agencies.)