Jan 11 (Reuters) – Emerging markets assets crept higher on Thursday ahead of U.S. inflation data that investors are watching closely for cues to interest rate cut path in the world’s largest economy, while the Turkish lira breached the 30-to-the-dollar mark, touching fresh lows.
The MSCI’s gauge of emerging market stocks .MSCIEF advanced 0.6% at 0934 GMT, while a basket of currencies .MIEM00000CUS ticked up 0.1% against a weak U.S. dollar. Benchmark 10-year U.S. Treasury yields were also seen slightly lower.
If gains hold, both the indexes are set for their best session this year.
Market participants will keep a sharp watch on U.S. consumer prices index(CPI) data, due later in the day, where core CPI in December is expected to remain unchanged at 0.3% from the month before, while on an annual basis, it is likely to slow to 3.8% from 4% in November, a Reuters poll showed.
“Unless there is a significant upside surprise in today’s CPI report today, the slowing inflation trend should encourage the Fed to begin cutting rates, giving it more confidence that inflation is falling back towards their target,” Lee Hardman, currency analyst at MUFG, said in a note.
Federal Reserve Bank of New York President John Williams said Wednesday that it’s still too soon to call for rate cuts as the central bank still has some distance to cover before inflation hits the Fed’s 2% target.
Turkey’s lira TRYTOM=D3 hit a new record low beyond 30.0 to the dollar and was last trading at 30.0050.
The lira lost more than a third of its value last year and more than 80% in the previous five years, having been battered by a series of past rate cuts in the face of soaring inflation.
Wall Street bank JPMorgan revised its target for the lira by year-end to about 36 to the dollar from 34 previously, saying it maintained a “bullish view” on the currency.
Turkey’s main banking stock index .XBANK gained 0.5%, touching a fresh record high.
Northward, the Russian rouble strengthened to a six-week high against the dollar, passing the 89 threshold it has been flirting with this week, supported by increased supply of foreign currency after Russia’s New Year holidays.
The rouble RUBUTSTN=MCX was last seen at 88.7875.
In Europe, Czech’s crown EURCZK= fell 0.3% against the euro after the domestic annual inflation rate in December came in cooler than expected.
Across Asia, most stocks and currencies were in the green, boosting the broader indexes.
JPMorgan said on Wednesday it was excluding Egypt from its GBI-EM emerging market government bond index series effective Jan. 31.
(Reporting by Siddarth S in Bengaluru; Editing by Tasim Zahid)
