Global equities took a hit on the last trading day of the week as investors reallocate their portfolio toward less risky assets.
The move was similar in the FX market with the US dollar extending gains against most of its peers, with the exception of the Japanese yen (up 0.25%) and the Swiss franc (range bound).
The EURO STOXX 600 gave up 0.65%, the DAX slid 1.40%, while the SMI fell 0.85%.
EUR/USD was unable to break the 1.1854 resistance to the upside and eased below 1.1770. After tumbling on its 200dam, USD/JPY fell to 109.35. The currency pair is heading towards its 50dma, which currently stands at 108.84. A break of the latter resistance would open the door towards 108.11 (low from May 29th).
Against such a backdrop, emerging markets are bearing the brunt of the sell-off. The South African rand lost another 2% this morning and reached its weakest level against the greenback since December last year amid disappointing economic data. The Brazilian real gave up 1.44% yesterday as USD/BRL hit 3.9657 amid mounting concerns over upcoming elections. INR, KRW, PHP and IDR were no exception as they fell 0.70%, 0.65%, 0.58% and 0.45% against the greenback, respectively.
Trade tariffs discussions will be at centre stage at today G7 meeting in Canada. The US will find themselves isolated as Donald Trump managed to make enemy of most of its allies.
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