Global stocks and cryptos retreat on higher taxes fears
The GBP/USD pair moved sideways after mixed economic data from the UK. In a report earlier today, the Office of National Statistics (ONS) said that the country’s retail sales rose from 2.2% in February to 5.4% in March. This led to an annualized increase of 7.2%. In the same period, core retail prices increased by 7.9% as the country continued to reopen. Further data by Markit revealed that the private sector expanded at the fastest pace since 2013. The composite PMI increased from 56.4 in March to 60 in April. However, data by the ONS also showed that the country’s debt continued to surge. Government borrowing rose to a record 303 billion pounds, the highest level since the second world war.
The euro bounced back after the strong flash manufacturing and services PMI data. According to Markit, the manufacturing PMI increased from 62.5 in March to 63.3 in April. This was a better number than the expected 62.0. The services PMI also increased from 49.6 in March to 50.3 in April. As a result, the composite PMI rose from 53.2 to 53.7. Most of the manufacturing strength came from Germany, where the sector PMI rose to 66.4. These numbers came a day after the European Central Bank (ECB) delivered a relatively dovish interest rate decision.
Global stocks retreated as investors worried about new capital gains taxes in the United States. In Europe, the FTSE 100, DAX, and CAC 40 indices declined by more than 0.20%. In the United States, indices like the Dow Jones and S&P 500 declined by more than 300 and 40 points, respectively. Media reports suggest that the president wants to end preferential tax treatment of investment income. The proposal calls for doubling the capital gains taxes of those earning more than $1 million to 39.6%. It will affect about 0.32% of American taxpayers. As a result, the top federal rate on the appreciation of assets sold will rise to as high as 43.4%.
The EUR/USD pair rose to an intraday high of 1.2056, which is significantly higher than yesterday’s low of 1.1992. On the hourly chart, the pair is approaching the upper line of the ascending channel shown in pink. The uptrend is also being supported by the Fractal adaptive moving average and the Average Directional Movement Index (ADX). Therefore, there is a possibility that it will keep rising ahead of the flash US PMI numbers and new home sales data.
The GBP/USD pair rose slightly after the mixed data from the UK. It is trading at 1.3886, which is slightly above yesterday’s low of 1.3820. On the four-hour chart, the pair is slightly below this week’s high of 1.400. It is also between the lower and middle lines of the Bollinger Bands and slightly below the important resistance at 1.3920. Therefore, the price will likely resume the downward trend as bears attempt to move below 1.3822.
The BTC/USD pair declined sharply as cryptocurrency prices crashed. The pair fell to the important support at 47,312, which was the lowest level on March 25. On the four-hour, the pair is attempting to rebound. It remains substantially below the 25-day moving average while the Relative Strength Index (RSI) and DeMarker have continued to drop. Therefore, the pair may bounce back as investors buy the dip.