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Lira and Dollar Strength as Fears Over Turkey Ease

Risk on sentiment returned and traders were once again in the mood for buying overnight. As the Lira moved higher, Wall Street rebounded snapping a four-day losing streak on the Dow. Whilst the markets have regained their cool towards Turkey for the time being, it is highly unlikely that the whole crises can now be swept under the carpet. These confidence issues are rarely a one or two-day event, never to raise their head again. Not only is it unlikely that hostilities between Turkey and the US will simmer down quickly, but fundamentals are stacked against emerging markets right now as they struggle in a rising US interest rates climate.

What was particularly noticeable across the previous session, was not the rebound in the Lira and other emerging market currencies, nor the return of the risk on trade – but more the resilience of the dollar which charged northwards to fresh one-year highs versus the pound, the euro, the Australian and New Zealand dollar.

With US stocks rising overnight, the dollar’s increase can’t be linked to risk aversion, import and export data from the US was also lacklustre, so not likely to have lifted the buck. The rally in the dollar comes back to the strength of the US economy and the fact that the US Federal Reserve is travelling along the hiking path unaccompanied by other central banks. Somethings needs to go seriously wrong for the Fed not to hike next month.

 

US Retail sales to beat 0.1%?

Investors will now look towards US retail sales due for release later today. With wages on the up and the labour market growing, there is good reason to expect a solid retail sales number, potentially better than the 0.1% forecast.

 

UK Inflation Data to Support BoE hike decision?

With the dollar going from the strength to strength the pound is falling by the wayside, hitting a fresh yearly low of $1.2705 as Brexit concerns and sluggish wage growth dent demand for sterling. Attention will now move to inflation data which will be scrutinized closely following the miss on wage data today. The CPI is expected to print at 2.5% year on year in July, up slightly from June’s 2.4%. Core CPI is expected to remain constant at 1.9%, which indicates that the rise in CPI is most probably down to oil prices which have risen around 12% year on year, something that the BoE tends to look through when considering whether or not to hike interest rates.


The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79 % of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.

The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79 % of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.

22-1-2020

DAX record high, Tesla $100B & markets brush off pandemic
EQUITIES Blowout fourth quarter earnings and subscriber growth at Netflix has refocused investors’ attention on market fundamentals. Market sentiment had been impaired by worries about the new coronavirus out of China, which has now spread to the United State… Read more

21-1-2020

Hang Seng dives on downgrade & coronavirus outbreak
EQUITIES There has been a steep fall in Asian markets overnight. There can often be some profit-taking in the run-up to the Lunar New Year but there are some specific causes too. The Hang Seng fell 2% after Moody’s downgraded the credit rating of Hong Kong g… Read more

20-1-2020

Oil prices spike on Libya pipeline closure, Europe to open higher
EQUITIES European shares are set to open higher on Monday in what may be a more muted day of trading with Wall Street closed for Martin Luther King Jr. Day. Trading in Asia was light with US investors on holiday today and Chinese New Year celebrations set to b… Read more

17-1-2020

S&P 500 tops 3,300 as Alphabet reaches $1 trillion
EQUITIES European shares look set to open higher on Friday bolstered by stats showing stable economic growth in China and another record-breaking session on Wall Street that saw the S&P500 top 3,300 for the first time. Mining companies are likely to featur… Read more

16-1-2020

Europe to open higher & Sterling recovers
Shares in Europe and on Wall Street are set for a higher open on Thursday after a positive session in Asia.   Wall Street notched up new records and finished the day higher after the signing of the phase one US China trade deal. That the S&P 500 and Nasdaq… Read more

15-1-2020

Stocks, oil lower as Tariffs stay in place, Persimmon, Goldman Sachs, Saunders, UK CPI
European shares are lower on Wednesday after a down session in Asia while LCG pricing points to a lower start on Wall Street. US Treasury Secretary Steve Mnuchin confirmed that tariffs against China will remain until November, after the US election. The tariff… Read more

14-1-2020

Currency manipulator, China exports, Yuan 5-month high, US bank earnings
European shares are flat on Monday after a mixed session in Asia while LCG pricing points to a lower start on Wall Street. INDICES: US removes China currency manipulator status Wall Street has yet again reached new record highs in the lead-up to the signing… Read more

13-1-2020

Waiting for signing, Taiwan, William Hill, Ford, UK industrial production
European shares are trading mostly higher on Monday after a rally in Asia while LCG pricing points to a higher start on Wall Street. INDICES: Taiwan, Trade deal signing The landslide re-election of President Tsai Ing-wen and its implications for Taiwan’s relat… Read more