EMERGING MARKETS-EM stocks, FX eye weekly declines on dollar's charge, Polish zloty rebounds

Emerging market stocks and currencies indexes eyed a weekly decline on Friday against a strong dollar on bets of higher-for-longer U.S. rates, persistent concerns over China's darkening economic outlook and deepening Sino-U.S. tensions. The MSCI EM stocks and currencies indexes were flat but eyed their worst weekly showing in three and five weeks, respectively, with the U.S. dollar headed for its longest weekly winning streak in nine years, bolstered by resilient economic data.

Emerging market stocks and currencies indexes eyed a weekly decline on Friday against a strong dollar on bets of higher-for-longer U.S. rates, persistent concerns over China's darkening economic outlook and deepening Sino-U.S. tensions.

The MSCI EM stocks and currencies indexes were flat but eyed their worst weekly showing in three and five weeks, respectively, with the U.S. dollar headed for its longest weekly winning streak in nine years, bolstered by resilient economic data. China's recent trade data signalled a possible stabilisation in economic downturn, but markets stuck to their views on the need for concrete stimulus for a meaningful economic revival.

Meanwhile, the Hong Kong bourse was closed as the financial hub saw its heaviest rain on the record. Among major currencies, the Polish zloty rebounded 0.6% but was on course for its worst week in over a year following a 75-basis-point rate cut earlier this week.

Adding to investors' worries, Governor Adam Glapinski said the central bank had no target for the currency or plans to intervene to defend the zloty. However, the move drew criticism from hawkish Monetary Policy Council members who called it politically motivated, weeks before the Oct. 15 elections.

"We cannot rule out that if the pressure on the zloty continues, it may prompt the Ministry of Finance to redirect wider stream of government funds in foreign currencies to the market," said Bartosz Sawicki, market analyst at Conotoxia fintech. Vice Governor Eva Zamrazilova said the central bank was not seriously discussing a Czech rate cut anytime soon.

The Czech crown gained 0.2%, with data showing an increase in unemployment rate in August. Hungarian forint rose 0.5% after data showed Hungary's August headline inflation came in above expectations.

"Inflation is not falling as well-paced and therefore further rate cuts may need to be either reduced in size or furthered away in time," said Santa Zvaigzne-Sproge, head of the investment advice department at Conotoxia. "No rate hikes may be expected in the following months."

Traders also awaited Russia's August inflation and second-quarter GDP data. Meanwhile, Gabon's ruling junta, which seized power in a coup last week, appointed a former opposition leader, Raymond Ndong Sima, as prime minister of its transitional government.

Also on the watchlist are Fitch credit rating reviews on Romania and Turkey. Moody's signalled on Thursday Turkey's post-election pivot is "clearly" a positive for credit rating.