Currency Performance This Week: The biggest EM gainers vs. the dollar this past week were HUF, PLN, CZK, RUB, CLP and TRY, while the only EM losers vs. the dollar this past week were BRL, MXN, ZAR and TWD.Market Overview: EM continued rallying this past week, as we expected. However, looking ahead, we are a bit more nervous as the pickup in risk appetite early this week is now giving way to increased concerns about U.S. and China growth after weaker than expected data was reported for both countries. Risk appetite is in flux, with strong earnings reports for the second quarter in a tug of war against rising fears about slowing global growth. We remain cautious, but believe that the backdrop for EM has improved enough to remain long those EM currencies with strong fundamentals. However, we believe some of the high flyers this past week will be unable to continue rallying in current conditions, and would include HUF and CZK in this category of likely underperformers in this coming week. Policy Outlook: EM tightening is to continue, with Latin America joining Asia in fairly aggressive tightening. A combination of strong growth and higher interest rates should help currencies in these two regions. We continue to remain nervous about Eastern Europe. Updated Trade Recommendations: We are losing modestly on our recommendation to go long KRW vs. USD at 1196 for a move to the June low around 1169, as it is currently trading at 1203. However, we feel that KRW fundamentals remain very good and so the won should do better in the coming days. We are, therefore, keeping this trade on. We are winning on our recommendation to go long CLP vs. USD at 537 for a move to the May/June lows around 528, which was almost hit (low for Thursday was 529). Lastly, we are also winning on our recommendation to go long RUB vs. USD at 30.91 for a move to retracement levels at 30.43 and then 30.07 (low for Thursday was 30.4230). New Trade Recommendations: We believe developments in Mexico are negative (cabinet shuffle in response to rising drug-related violence, slower U.S. growth), and so we recommend going short MXN vs. USD at current levels around 12.81 for a move to the July high around 13.18. Hungarian forint has rallied this week despite having what we believe are amongst the worst fundamental and political outlooks in EM right now. We recommend going short HUF vs. EUR at current levels around 280 for a move back to the late June high of 288 and then the early June high of 290.50.