Emerging economies have been suffering of late, with the US President trying to tick off as much off his list of must-dos, with the early days of the US Presidency witnessing North Korea, Iran, and China grabbing the majority of the headlines, with Turkey not being an exception.
The US sanctions threat has shaken the global financial markets and sentiment toward the Turkish Lira and the 10-year year government bonds. The exodus from the government bond was led toward interest rates to 20% this week, with the Turkish government looking to reduce the tide of a mass exodus of much needed foreign investment into the country.
The month of August seems to be a volatile one, not only temperature wise but also with the forex volatility increasing. August which is known as a period of active vacation is usually accompanied by a decrease in trading volumes but has so far resulted in increased volatility. So far, emerging market forex have been subject to sanctions or tariffs from the US. Surprisingly, the British Pound has been counted among the camp of victimized currencies.
On the other hand, the commodities market have been spared the summer lull, with gold at the end of last week dropped to $1204 per ounce, and now stabilized near $1215, supported by demand for safe-haven asset against the drop in the stelring and the extreme state of oversold of gold in the prior months. While Oil lost ground on Wednesday following the EIA report on the return of shale companies to net positive cash flow, which promised the growth in production. As a result,WTI revisited 2-month lows near the 65.80, while UK Brent crude oil retreated more than 3 to fall below $72 momentarily.
Today’s calendar features producer price data out of the US.US factory price data as gauged by the producer price index (PPI) will be hitting the markets at 15: 30. July’s PPI is anticipated to grow by 0.2% m/m, below June’s 0.3%. Moreover, weekly jobless claims figures are due out of the US at the same time, Canadian housing starts data for July are slated for release at 15:15.
EURUSD: upside should be limited by 1.1850 to bring down trend resumption eventually.
GBPUSD: Intraday bias in GBP/USD remains on the downside at this point.
USDCAD: USD/CAD drops sharply after hitting 1.3120 and intraday bias is turned neutral first.
USDCHF: Intraday bias in USD/CHF remains neutral at this point.
USDJPY: Intraday bias in USD/JPY stays neutral as it’s bounded in range of 110.55/112.10.