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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.


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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.

21-5-2019

Nasdaq with US tech sector plummet on Huawei decision
Wall Street closed lower as the fallout from Huawei dragged down tech stocks. The Nasdaq plummeted 1.7% on Monday as the crackdown on China’s largest telecommunications and electronic equipment maker pressured the US technology sector. US chip makers tumbled a… Read more

20-5-2019

Oil jumps as OPEC signals intention to maintain cuts
Markets Mixed As Google Suspends Business with Huawei Asian markets put in a mixed performance overnight as investors paused, waiting for new developments in the US – China trade dispute. This comes after a week of escalating tensions between the two powers. … Read more

17-5-2019

Pound below $1.28 as Theresa May prepares to leave
Wall Street closed higher for a third straight session overnight as solid economic data and robust earnings from the likes of Cisco and Walmart boosted sentiment. Investors put US China trade dispute anxieties behind them and continued to jump back into equiti… Read more

16-5-2019

Trump's Visible Hand Drives Markets
The Dow and the broader US market extended the relief rally on Wednesday amid easing trade tensions. News that Trump would restart trade talks with China boosted optimism that the two powers could avoid a prolonged, economically damaging trade war. But it woul… Read more

15-5-2019

Stocks Rebound with Chinese Stimulus Hopes
Asian markets followed Wall Street higher overnight as trade war fears eased. Markets across Asia rebounded from 3 ½ month lows on a softening of stance from Trump and amid growing expectations of further stimulus from the Chinese government. Despite the advan… Read more

14-5-2019

Worst Day on Wall Street Since Jan 3
Wall Street closed deeply in the red on Monday. The Dow shed over 600 points and the S&P dumped 2.5% in the worst trading day since 3rd January. Investors rushed to take risk off the table as China raised tariffs on US imports, a retaliatory measure to the… Read more

13-5-2019

Futures Plummet As Investors Eye Trade Dispute Impasse
As we head into the new week, trade tensions will remain a key focal point for the markets and risk sentiment. In the UK specifically, Brexit and Theresa May’s ability to cling to power ahead of next week’s European elections will be an important driver of dom… Read more

10-5-2019

Yield Curve Inverts But "Beautiful Letter" Keeps Deal Hope Alive Despite Tariff Increase
Global equity markets were mixed as investors digested the latest headlines from the US – China trade talks. Asian markets pared earlier gains, European bourses are pointing to a stronger open, whilst US futures head south. The mixed response from the market r… Read more
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.