The global equities and EM currencies took a beating on Monday as Turkey’s national currency, lira, fell to a new record low against the greenback after the tensions with Washington escalated over the weekend.
Euro stood near a one-year low against the dollar on Tuesday, remaining under pressure as the Turkish lira wobbled on worries that Turkey’s economic woes could hit European banks and spread to other emerging economies. Investors are nervous the plunge in the lira could prompt capital outflows from other emerging economies that run a hefty current account deficit and rely on foreign capital.
Today’s EUR macro calendar is a busy one, starting off with the German preliminary GDP and final CPI data due at 06:00 GMT. In the European session, traders look forward to the UK labour market report due at 08:30 GMT, with earnings figures the focus. At 09:00 GMT, the Eurozone flash GDP report will be published alongside the industrial figures that will wrap up an eventful EU session.
In contrast, the NA session remains data-light, with the only import prices data eyed from the US among other minority reports. Meanwhile, the American Petroleum Institute (API) will release its weekly US crude stockpiles data at 20:30 GMT.
The yen, often perceived to be a safe haven because of Japan’s net creditor status, edged back against the dollar, retreating from its highs to settle around 110.70. Dollar upward move was also helped by rises in U.S. bond yields.
The GBP/USD is trading into 1.2770 ahead of London’s upcoming market session for Tuesday, with the Pound having managed to halt – at least momentarily its bearish movement. Risk aversion across the broader markets on Turkish contagion fears, pushed traders to the US Dollar, as a result the Sterling taking a severe beating. The GBP is looking for a bullish push from economic figures today after closing in the red for seven straight trading days.
Oil prices rose on Tuesday after reports revealed that top exporter Saudi Arabia cut production one month after it agreed the OPEC to produce more crude. Meanwhile, OPEC remains positive on overall demand. U.S. President Donald Trump is aiming to cut Iran’s oil exports to zero by November, a policy that threatens to leave the world short of oil and boost prices at the pump if OPEC and Russia cannot fill the gap.
Gold closed below $1,200 on Monday for the first time since March 14, 2017, despite risk aversion in the financial markets. The precious metal has failed to pick up a bid and fell to $1,193 as it appears to no longer be considered as a safe haven asset. This is evident from the fact that it has lost more than 12.5 percent in the four months despite escalating US-China trade war.