Summary:
- Emerging Market currencies set for worst week in 18 months
- Unexpected drop in Canadian core retail sales sinks CAD
- Bitcoin on track for notable weekly decline
- EURNZD recommendation from MS
One of the biggest stories this week has been emerging markets (EM), with several currencies that fall into this bracket experiencing large declines. In fact, if we take the EM space as a whole, it is looking like it will be the worst week for this group of currencies since November 2016 – the month that Trump won the US election. The root cause of these moves are the same as the ones we saw back at the end of 2016, just after Trump’s unexpected election victory with rising US treasury yields and a stronger dollar common explanatory themes on both occasions.
The final economic release of note for the week has caused a significant market reaction in the Canadian dollar, which has dropped sharply lower. The headline retail sales for March showed a higher than expected print with the M/M coming in at 0.6% against 0.3% expected, with the prior also revised higher to 0.5%. But this is a bit of a misleading data point, with the core number a big disappointment and outweighing the beat in the headline.
It’s been a pretty big down week for cryptocurrencies with an early rally in bitcoin fizzling out and price dropping back near the 8000 mark. Each news regarding cryptocurrency taxation deserves more attention this is especially true as we are living in the world that many regulators aim to burden cryptocurrency traders with additional taxes. However, there are some positive revelations from some to time and such news has recently come from Thailand where the country’s Revenue Department announced that it will waive a 7% VAT rate for individual cryptocurrency investors.
European market on the whole have faded a little today after some decent gains in the past few days. DE30 still remains within a short-term upward channel. The German index has touched the mid-term resistance zone yet it proved too strong for the market bulls for now. In turn the benchmark reversed to trade in the vicinity of the 13100 pts handle, just a notch beneath the earlier mentioned zone. Telecoms are the biggest underperformers among European companies while financials and insurers are the top gainers.