"Sell America" trading resumes: US dollar weakens, emerging market currencies and stocks rise together.

Assets in emerging markets showed an upward trend on Monday, with the market following significant features of a weaker US dollar and a resurgence of "sell America" trades. Previously, the US Department of Justice had threatened criminal prosecution and issued a subpoena to the Federal Reserve. Most emerging market currencies rose against the US dollar, with the Mexican peso and the South African rand, usually seen as risk appetite indicators, performing particularly well and leading the market. At the same time, the Bloomberg Dollar Spot Index fell by 0.2%, poised to record its largest single-day decline since December 23. Earlier, the Trump administration's attack on the Federal Reserve had escalated. Federal Reserve Chairman Jerome Powell stated that the Federal Reserve had received a grand jury subpoena, threatening criminal prosecution. He pointed out that this was aimed at weakening the Fed's independence in setting interest rates based on evidence and economic conditions. This news put downward pressure on the US dollar, prompting traders to turn to safe-haven assets like gold and silver, pushing both prices to historical highs. Alejandro Cuadrado, Director of Global Foreign Exchange Strategy at New York's BBVA, said, "As the nomination for the next Federal Reserve chairman is about to be announced, this event has escalated the debate on the independence of the Fed. This is negative for the dollar, as the narrative that 'political pressure will force the Fed to cut rates and move to a more dovish stance' is likely to dominate the whole year." Marco Oviedo of XP Investimentos pointed out that the weaker US dollar, coupled with higher carry trade potential, is expected to offset the impact of rising political risks in regions like Latin America, helping emerging market currencies maintain resilience. "With the lingering uncertainty brought by GEO Group Inc's political factors, I expect the prices of some emerging market currencies to remain stable in the short term," the senior strategist said. Stock markets also rose in sync, with the MSCI Emerging Markets Stock Index rising by 0.9%, approaching historical highs. Alibaba Group Holding Limited Sponsored ADR (BABA.US), TENCENT, and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) led the gains, following a strong close on Wall Street last Friday. The Hong Kong stock market rose, and the South Korean stock market hit record highs led by chip and industrial stocks. Chinese Minister of Industry and Information Technology Li Lecheng stated in an interview that the Chinese government will accelerate the integration and application of digital technologies, adding fuel to the enthusiasm for AI-themed investments in the Asian market. Geoffrey Yu, Senior Strategist at TrustCo Bank Corp NY, said, "With support for long-term allocations in private and public projects, the AI theme remains relatively stable." On the other hand, investors are closely watching the situation in Iran - if the government is overthrown, it could lead to a global reconfiguration of political dynamics and volatility in energy markets. Lebanese bond prices have climbed to their highest levels since March 2020 when the country defaulted on around $300 billion in international debt. The market is generally optimistic, with the proposed law aimed at unfreezing bank deposits expected to be a key positive step in alleviating the country's financial woes.