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Stocks, FX Muted ahead of U.S. Inflation Data; Alibaba Gains

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April 13 Reuters Emerging market stocks and currencies were subdued on Tuesday, as investors awaited key U.S. inflation data that could set the stage for more dollar strength and undercut riskdriven assets.

The MSCIs index of emerging market currencies fell about 0.1, with most units in Europe, the Middle East and Africa retreating slightly to the dollar.

But investment bank JPMorgan recommended selling emerging market currencies, citing underperformance in comparison to developed markets, as well as a resurgence in COVID19 cases.

While emerging market stocks were also largely flat, shares of Chinese ecommerce firm Alibaba rose 0.6, after rallying more than 6 on Monday amid relief that the firm would not be greatly affected by a recent government crackdown on online firms.

Shares of Chinese peer Tencent fell about 1.

Investors were anticipating U.S. inflation data, due at 1230 GMT, to provide cues on a recovery in the worlds largest economy. A strongerthanexpected reading could ramp up expectations of early monetary policy tightening by the Federal Reserve, and boost the dollar and treasury yields.

Earlier this year, emerging market debt and currencies had come under pressure from strength in the dollar, as rising U.S. yields made riskdriven debt appear less attractive.

Inflation data is likely to prove positive for the U.S. dollar, but we dont expect any recovery to last for long… the Fed has clearly noted that any surge in inflation this year is likely to…

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