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Markets Recover as the Turkish Lira Bounces-off a record low

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Equities

Major US indices closed lower on Monday pressured by the Turkish Crisis. The Dow Jones Industrial Average fell by 0.5% to 25187 and the SPX500 tumbled by 0.4% to 2821. However, US indices recovered during the Asian session and the start of the European trading session as European equities opened higher. Markets anticipate that the Turkish delegation to the US will be able to cool down the tension. The Dow Jones is currently trading above 25300, and the SPX 500 is hovering at a high of 2835. A teleconference between the Turkish finance minister and investors from the US, Europe, and the Middle East will happen on Thursday. Market participants will closely monitor the outcome.

USD

The dollar index which measures the greenback against a basket of major currencies is hovering near a fourteen-month high. DXY traded at a high of 96.52 yesterday, but the index retreated slightly to trade at a yesterday’s low of 96.20 during the Asian session. The USDJPY rebounded from a six-week low of 110.10 to trade at a high of 111.15 as the global markets recovered supporting investor's risk appetite. The USDTRY fell from a record high of 7.14 to trade at a low of 6.46. The pair is highly volatile as any headline regarding the matter between US and Turkey will affect an investor’s decision.

Metals

Gold prices fell to the lowest level since January 2017 despite the market uncertainty and high risk. The gold ounce traded at a low of $1191. On the other hand, the silver ounce also dropped to a thirteen-month low of $14.95.

Oil

Oil prices rose slightly during the Asian session supported by a report from OPEC showing that Saudi Arabia lowered its oil production to avoid market oversupply. The West Texas Intermediate crude futures traded at a high of $67.85 per barrel and the Brent futures rose to a one-week high of $73.30 per barrel. The American Petroleum Institute will report the weekly US crude oil stock later today. The US inventory data had a significant effect on oil prices last two weeks.

Major Economic Events

GMT Country Event Expectation Previous
8:30 UK Average Earnings Index +Bonus (Jun) 2.5% 2.5%
8:30 UK Unemployment Rate (Jun) 4.2% 4.2%
9:00 EU German ZEW Economic Sentiment (Aug) -20.1 -24.7
9:00 EU GDP (QoQ) (Q2) 0.3% 0.3%
20:30 US API Weekly Crude Oil Stock   -6


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