Market movers today
The development in Turkey will continue to drive financial markets today, see more below and Flash Comment – Turkey: Erdogan chooses the confrontation path – TRY collapses, 10 August 2018.
It will be quiet on the data front today with no big releases. Key global releases this week are US retail sales and Chinese data for industrial production, investments and retail sales. Later this week, Brexit will also be in focus again, as talks between the EU and the UK resume in Brussels. For more on upcoming releases see the market movers section in Weekly Focus .
In Sweden, housing price data is due today (see next page). The key event in the Scandies this week is the Norges Bank meeting on Thursday.
Selected market news
Stock markets and bond yields have continued to trend lower as the Turkish lira saw a savage opening in the Asian session last night. The USD/TRY crossed the 7.23 level before the TRY rebounded back to below 7.00 against the USD in a thin market. On Sunday, President Erdogan urged Turkish businesses to stay away from FX purchases and to support the TRY. The massive sell-off in the TRY started last Friday, when in his speech Erdogan spooked investors by choosing to continue his path of confrontation with the US and calling for Turks to hand in their US dollar, EUR and gold holdings. Shortly after, TRY’s turmoil deepened on President Trump’s tweet, which mentioned a doubling of tariffs on metals, citing bad relations with Turkey.
EUR/USD moved lower as well in Asian trading, hovering just below the 1.14 level this morning. Markets are concerned over the potential impact of Turkey on what is already a fragile environment in the euro area. The stronger USD has also pushed USD/CNY up to the highest level since May 2017. Chinese money market rates continue to decline in a sign that China is keeping the foot on the accelerator to counteract negative effects of the trade war. Chinese three-month money market rates are now back at previous lows of 2.79%, last seen in 2016 when China was hit by outflows and financial turmoil.
For those of you returning from holiday, here is a quick wrap-up of the main themes over the past three weeks: Vacation Wrap-Up: Market themes over the past three weeks , 12 August 2018.
