USD seen strengthening against Emerging Market currencies

As markets continue to be wary about the financial turmoil in China, the uncertainty surrounding financial growth and stability deteriorates. With further slowing down of the global economic activities, the commodity prices continue to decline on excess supply. In the absence of stimulus from the ECB, the EUR is expected to underperform in the medium term, while the Fed is unlikely to increase rates amid global slowdown.

The USD is seen vulnerable to Chinese growth concerns or CNY weakening, however, if the Fed policymakers are not convinced for further policy firming, then it is expected that the major central banks will postpone tightening or further ease their policy. Traditional safe haven such as the JPY is expected to find support in line with increased risk aversion.

"We expect the USD to continue strengthening particularly vis-à-vis EM currencies as market volatility continues to trend higher" - Barclays