With the banking sector strongly underperforming the broader stock market in both Europe and the US, funding issues are escalating. The spreads between banks and government funding are rising to multi-year highs in Europe and undermining sentiment.
In emerging markets, some cracks are appearing in CE currencies, where the PLN and HUF are under pressure and are underperforming the EUR. EUR/TRY is also threatening to overcome its 2011 peak. While several Asian currencies are holding up well, USD/TWD is entering a bullish seasonal period and our focus is on 29.05 as a close above this level would likely signal a deteriorating outlook.
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BARCLAYS CAPITAL
TECHNICAL RESEARCH