Tensions Between US and Turkey Mount

Daily Analysis - 10/08/2018

Turkish Lira Continues Downward Spiral

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The Turkish Lira tumbled to yet another fresh record low against the Dollar in early Friday trade as a Turkish delegation returned after meeting top US State Department officials with no solution to a diplomatic standoff that erupted between the two countries. Tensions between Ankara and Washington have been simmering after an US evangelical pastor Andrew Brunson was detained in Turkey on terrorism charges. This move accompanied by the consolidation of power within the country is deepening investor concerns about the authoritarian trajectory adopted under President Tayyip Erdogan. The Lira sank 3.00% to an all time-low of 5.7358 per Dollar in Friday Asia-Pacific trade, shedding over 5.00% overnight.

Aussie Dollar Slips Against the Greenback


The Australian Dollar is trading at a one week low against its US peer after the Reserve Bank of Australia’s (RBA) downwardly revised its inflation forecasts. The RBA lowered its December 2018 inflation outlook to 1.75% while striking a more downbeat note on the price outlook. According to the Central Bank’s August Statement of Monetary Policy released earlier this morning, underlying inflation is not expected to climb to the middle of its 2.00% - 3.00% target range until 2021. The trimming of inflation estimates adds credence to RBA’s view that there exists no strong case for a near-term interest rate hike. Average growth forecast for 2018 was revised higher to 3.25% from 3.00%, but that failed to bid up the Aussie dollar.

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Oil Hits 7-Week Trough as Trade War Heats Up


Crude prices finished lower on Thursday, extending their losses from the previous session as an escalation in the ongoing US-China trade dispute raised doubts over the global demand outlook for oil. Investors are anxious that any slowdown in the world’s two biggest economies would slash demand for the energy commodity. Brent crude futures for October delivery fell 21 cents to settle at $72.01 a barrel. September US crude contracts lost 8 cents, falling to $66.69 a barrel. Both benchmarks slumped over 3.00% on Wednesday after official US data showed a smaller-than-expected weekly drawdown in crude stockpiles.

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FTSE Charts 3-Day Winning Streak


Futures contracts of the UK’s main equity benchmark finished up on Thursday, notching a three-day winning streak as gains in pharma giant AstraZeneca and metals producer Fresnillo more than offset a plunge in shares of TUI AG. Shares of TUI fell 2.50% after the travel company announced that a bout of blistering hot weather throughout mainland Europe has hurt its bookings business. Investor sentiment was also somewhat dampened in the wake of fresh US sanctions on commodities giant Russia. This in turn weighed on major UK oil and mining stocks, with BP and Shell standing out as other drags on FTSE 100 performance.

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