Entering into US session, Yen is trading as the strongest one for today on risk aversion. It over takes Dollar’s position as the strongest major currencies again. But this time Swiss Franc doesn’t follow. Instead Sterling is steady as the third strongest one after CPI came in meeting expectations. Canadian Dollar is the weakest one.
European indices are trading deep red at the time of writing. FTSE is down -1.13%, DAX down -0.94%, CAC down -1.15%. That followed broad based weakness in Asia earlier today. Nikkei closed down -0.68%, Hong Kong HSI down -1.55%, China Shanghai SSE down -2.08%, Singapore Strait times down -0.27%.
But this time, Turkish crisis is not the one to blame. Turkey’s clashes with the US has turned into trade war. The country doubled tariffs on some US imports including alcohol, cars and tobacco, in response to US doubling of steel and aluminum tariffs. However, Lira is extending this week’s rebound with USD/TRY hitting as low as 5.9180.
Instead, risk aversion is partly due to poor earnings report of Tencent. Also, copper and zinc prices fell to the lowest level in more than a year. And, probably more importantly, the Chinese Yuan is extending recent steep down trend. USD/CNH (offshore Yuan), surges to as high as 6.9324.