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FTSE takes a breather, EUR mixed
FTSE started the day upbeat. Basic materials (+1.00%) lead gains at the open, as financials, technology and utilities are set to perform well. We could see the FTSE taking a breather following the decent selling pressure it experienced due to a stronger pound and cheaper oil. There is a potential to rise towards the 6900p level, yet the upside path could be slippery and limited heading towards the 6980/7000p zone.

Eurozone manufacturing PMI came in a touch lower than expectations. The manufacturing activity was better in France, yet worse than expected in Germany. The mixed PMI figures from the Eurozone capped the early appetite in the EURUSD, which is seen picking up some momentum on the bullish side. Clearly the 1.15 level against the US dollar is slowly entering the frame. A sensible appreciation in the euro could dent the appetite in Eurozone stocks and further pressure the DAX and the CAC on the downside.

The US dollar paired gains accumulated on Monday. In Asia, the Kiwi (+0.70%) was the biggest gainer against the US dollar, as Reserve Bank of New Zealand (RBNZ) Governor Wheeler, hinted at an additional 35 basis point cut, yet said that rapid cuts were not justified.

The overall direction in the US dollar is lacking as the Fed expectations have become too noisy. The markets will be seeking answers from the FOMC Chair Janet Yellen’s speech due on Friday at Jackson Hole symposium. Until then, the US dollar volatility will certainly remain on the menu.


Turkey to announce rate decision

Turkey is expected to further trim the overnight lending rate by 25 basis points as part of its monetary policy simplification, and loosening plan.

Lower rates are weighing on lira appetite, combined with the negative outlook assigned to its sovereign rating by Fitch. Should the Fed shift towards a more hawkish policy stance, lower Turkish rates could further damage the lira’s value and renew the upside pressure in USDTRY towards the 2.98 – 3.00 area.