Risk rebounds

There is some pause in Dollar strength currently underway. The Turkish Lira has strengthened rapidly after Turkey secured a 15-billion-dollar loan from Qatar, with emerging market currencies also seeing some strengthening. Riskier assets and the EUR scored gains in Asia, possibly due to the news that Chinese officials will be traveling to the United States for trade talks in late August, providing additional lift to the market sentiment and weighing down on the US dollar across its main competitors.

Today’s EUR calendar also offers a plenty of risk events for the EUR traders, starting off with the German WPI release at 06:00 GMT, followed by the Eurozone trade balance will be reported for June at 09:00 GMT. The US calendar today sees the housing starts and building permits data at 12:30 GMT alongside the release of the usual weekly jobless claims and Philly Fed manufacturing survey.

The USD/JPY pair plunged to 110.42 in yesterday’s US session, but earlier today made a recovery back to 110.80. The US Treasury yields gave back all their recent gains as fears that the Turkish crisis will spread into other EM fuelled demand for safe-haven bonds and the pair ignored encouraging US macro readings, which were barely enough to halt the decline. There are no news coming from Japan at the beginning of the day.

The UK’s CPI reading yesterday came in at 2.5%, struggling to meet market expectations, while wages only rose at an annualized rate of 2.4% for the quarter into June. Next up for the GBP will be Thursday’s Retail Sales figures, dropping at 08:30 GMT.

Oil prices on Thursday regained some of the previous day’s losses after Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets. China and the United States have implemented several rounds of tit-for-tat tariffs on each other’s goods since the start of the year and have threatened further tariffs on exports worth hundreds of billions of dollars. Still, sentiment in oil markets was broadly cautious due to the rise in U.S. crude production and storage levels and weakness in emerging economies, especially in Asia. While supply rose in the United States, Asia’s markets were showing signs of economic slowdown due to trade disputes with the United States and currency weakness, dragging on oil market sentiment.

Gold prices dropped on Thursday despite the Dollar also sliding and higher demand in safe-haven assets. Gold has extended its losses, hit a 19-month low of $1,160 earlier in the session on commodity sell-off as worries about escalating tensions between the US and Turkey have not worn out.