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USD gains see Gold and EM fall lower

Summary:

  • Gold falls below the 1300 level to hit 2018 low
  • USD rising across the board after retail sales boost; US500 pulls back
  • EM currencies also seeing sizable declines  
  • Pound struggles despite decent wage growth
  • Cryptocurrencies move lower as Bullard shares his views 

The main economic release of the afternoon session was US retail sales, which despite showing a little miss on the forecast were pretty decent overall - largely thanks to upwards revisions of prior readings. One of the clearest reactions in the markets was in Gold with the precious metal falling below the 1300 level to trade at its lowest level of the year. 

The decline in Gold is largely down to a rise in the US dollar, and the gains seen in the buck may also have weighed on US indices. The US500 fell to its lowest level of the week below 2710 not long after the data and after a bright start to the week the market is coming under a little pressure.   

Another by-product of this rally in the buck has been a pretty large sell-off in the emerging markets space. ZAR, TRY, BRL and MXN have all shown sizable declines against the USD, with broad strength in the greenback as well as some individual developments in particular in Turkey and Mexico weighing on EM.  

Closer to home, the pound has failed to make any notable gains despite a decent pick-up in wages according to the latest employment figures. During the three months ended in March average weekly earnings grew 2.6% in a year-over-year basis while wage growth stripping out bonuses picked up 2.9% - both readings proved to accord with economists’ expectations.

Despite a bright start for crytpocurrencies today, they have fallen back with all 5 markets now in the red. The gains were possibly due to James Bullard who spoke to CNBC during the Consensus conference (the even concerning cryptocurrencies) in New York, and underlined that instability in exchange rates is the biggest obstacle toward more widespread cryptocurrency acceptance. While he explicitly stressed the problem of huge price swings, he also noticed that virtual currencies facilitate trade across the globe.

 

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