Morning Brief: 21/04/2021
Asian stock markets have followed US and European stock lower this morning, with many of the leading indices in Asia trading heavily in the red. Japanese stocks indices, such as the Nikkei225 and the TOPIX, are amongst the worst affected.
The main reason for Japanese stocks falling into the red is the fact that many of the largest Japanese cities have declared a state of emergency. The lack of economic activity due to new COVID-19 lockdowns is spooking Japanese traders and investors.
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Something else to note is the fact that the Bank of Japan has said it was going to scale back buying ETF’s in its March policy review. This is another reason why traders could be getting spooked, and the Bank of Japan fails to come to the rescue.
Antipodean currencies are taking a big hit this morning, with the New Zealand dollar and the Australian dollar suffering heavy losses against the US dollar and the Japanese yen. The classic risk-off trade is to sell the AUDJPY and NZDJPY when stock markets are falling in Asia.
Despite the decline in antipodean currencies, both Australia and New Zealand released better-than-expected data points this morning. Australian retail sales beat markets expectations, while New Zealand inflation number also outpaced expectations.
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The Canadian dollar is coming under heavy pressure, ahead of today’s inflation report and the Bank of Canada interest rate decision, where the central bank is widely tipped to taper QE, following recent solid data points.
Sterling is treading water close to the 1.3900 handle, following a swift reversal from the 1.4010 level. British pound traders are awaiting a key speech from Bank of England Governor Andrew Bailey.
Bitcoin has fallen back towards the $55,000 support level today after the top cryptocurrency closed the daily candle back above its 50-day exponential moving average. The BTCUSD closed yesterday’s daily candle below the 50-day EMA for the first-time since the bull run began in October.
Data Watch
The economic calendar in the European session is focused on UK and EU data points once again. German is holding 10-yeat bond auction, while in the United Kingdom all eyes will be on Governor Bailey’s speech. Any hawkish commentary and the British pound could surge.
Traders await a feast of Canadian related data points during the US session. Inflation data from Canada is expected to show a strong pick-up, both in the monthly and the annual headline readings.
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During the United States trading session we also see the release of the latest EIA crude oil stock report. The Canadian dollar could be set for some major volatility today with Canadian macro data and oil data in focus.
