During the shorter holiday trading week, risky assets appreciated despite a clear upward trend in global yields. American actions led them. The dollar is experiencing declines against major currencies and major emerging market currencies, estimate Ebury analysts Enrique-Diaz Alvarez, Matthew Ryan, and Roman Ziruk.
In their opinion, the good non-farm payrolls report from the US labor market did not help the dollar, which experienced a sell-off against most currencies. The emerging market currencies, led by the Turkish lira, performed particularly well – last week, almost each of the major emerging market currencies appreciated by more than 1 percent.
"We expect the positive sentiment in the financial markets to stay with us for a while. We are particularly positive about EM currencies as they are cheap and seem to take advantage of the current situation," Ebury analysts said.
In their opinion, the past week for the Polish zloty was one of the most interesting in recent months. It began with panic and an increase in the EUR/PLN exchange rate to the level of 4.68, the highest in 12 years, followed by a marked appreciation of the Polish currency. An important element supporting it was the improvement in global sentiment, however, the scale of the zloty appreciation was greater than that of other currencies in the region.
"We believe that the zloty still has a lot of room for growth, which should be supported by the improvement of the covid situation both in Poland and in Europe. It is possible, however, that the weakness of the zloty will return for a short time. The market expects increased volatility around the resolution of the Supreme Court on Swiss francs (April 13), which will probably result in considerable costs for banks with foreign currency loan portfolios," the report reads.
Ebury believes that ultimately the court's decision should reduce the country's macroeconomic risk.