Lira

Asian stocks were under renewed selling pressure this morning as global trade concerns and chaos across emerging markets weighed on risk appetite. Global trade developments have certainly placed investors on an emotional roller-coaster ride this week with the initial optimism over NAFTA talks outweighed by U.S.-China concerns. Market sentiment is likely to remain cautious, especially after President Donald Trump threatened to withdraw the United States from the World Trade Organisation.
There is mixed sentiment towards the Greenback at the start of the new trading week. The dollar has edged marginally higher against the euro, the pound and the Australian dollar with the Greenback broadly stronger against those in the EMEA as all eyes return to the Lira after Turkish markets resume trading following a week-long holiday.
A sense of relief was felt across financial markets following the news that Beijing will resume trade talks with Washington next week. Although the chances of a breakthrough deal from lower-level talks are seen as unlikely, the meeting could be a positive step towards easing trade tensions between the world’s two largest economies.
This morning brings a reprieve from turmoil; the Turkish Lira has bounced back as much as 8% before settling in. The story will continue to develop and an agreement to release the American pastor will certainly be favorable for the global risk appetite. While the damage to the world’s currency market has been done, we maintain that it is important to not get stuck in the forest so that you can see the trees; there can be a lot of noise in the headlines, especially during slower summer months.
The markets were a little calmer in the first half of today’s session as the Turkish lira finally stopped falling, while the pound staged a short-lived bounce in the aftermath of mixed-bag UK data. The dollar was little changed, rising most notably against the yen thanks to the slight reduction in risk aversion. Stocks rebounded but were again coming under pressure at the time of writing. Oil prices rose but gold and silver remained near yesterday’s lows following their big slide.
The crude oil and petroleum markets took a Turkish bath yesterday, but in doing so it may have washed out the bearishness and put in our seasonal low. The moves in the market seemed beyond crazy because at the end of the day the Turkish currency crisis is a much more political than financial crisis. Oil moved on the Organization of the Petroleum Exporting Countries, lowering its demand forecast and fears of a rise in supply, but it was Turkey that cleansed the market.
The Turkish Lira resumed its drop early Monday touching a new record low of 7.21 per dollar before recovering slightly during Asia trade. Comments from President Recep Tayyip Erdogan and Finance Minister Berat Albayrak over the weekend that a plan would be revealed today to calm the markets failed to restore confidence.
In a week where market headlines continue to be driven by a potential trade war breaking out between the United States and China along with the latest OPEC meeting in Vienna, traders are unable to ignore the likelihood that the upcoming weekend election in Turkey could create further volatility in the financial markets.
It is expected that the latest installment of concerns over the United States and China entering a potential trade war will encourage global stock markets to come under pressure this week. Some indications of risk aversion are already being seen in the markets, with the Japanese yen gaining as a result of market uncertainty and a number of different Asian currencies trading lower due to reduced investor appetite.

Despite the Federal Reserve coming across much more upbeat than expected after raising U.S.