Summary:
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TRY looks to find a footing after recent losses
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US indices continue to search for direction
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Oil regains ground after holding key support
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GBP traders confused as jobless rates falls
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Outlook for NOK ahead of monetary policy change
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Top 3 charts of the week
Tuesday’s trading is bringing long-awaited respite to equity investors which is driven by lowered risks related to Turkey, on balance, we do not think that a rally seen in the Turkish currency could last for longer. Therefore, we reckon that today’s relief could be rather temporary, and new declines may occur once TRY traders realize that basically nothing has changed thus far. Anyway, so far so good as credit-risk gauges concerning Turkey are turning lower today.
It’s been an intriguing few days of trade for US indices with the large-cap benchmarks seemingly caught between making another push higher into uncharted territory and pulling back on the growing concerns regarding contagion from the Turkish crisis. The last 4 daily candles have all seen red closes, but it should be noted that the last 2 days in particular have seen the market end off its lows and exhibit a lower wick. Yesterday saw a strong move higher at the start of the US session but the rally fizzled out and faded and the price action remains far from certain.
There’s been further gains seen in the price of Oil today, with crude enjoying a nice bounce after falling lower around yesterday’s European close. The market has been under pressure since last week’s DOE inventory release which saw a large decline of more than 3% on the day. Last Wednesday the market was already moving lower but the inventory data and reports of Chinese sanctions on US oil exports saw the selling gather momentum with a high to low drop of around 300 ticks for the day.
The UK employment rate declined to its fresh record low (still the lowest since 1975) in the three months through June. On the flip side, the rosy outlook was blurred by a bit more than expected sluggish wage growth as well as stubbornly low productivity growth. Overall, the net fallout for the pound has been limited so far as the currency is trading just negligibly higher against the US dollar following the data.
It was March 2016 when the Norges Bank decided to change rates for the last time, cutting the deposit rate by 25 basis points to 0.5%. After more than two years the Norwegian policymakers are setting the stage for a rate increase which could take place as soon as September. Meanwhile, market participants do not seem to share the hawkish tone of the central bank assigning limited odds to see an increase next month even as we have not been offered evident reasons to doubt the monetary tightening. This analysis focuses on major points why the Norwegian krone could be at a turning point.
The latest 3 charts of the week posted earlier cover USDTRY, USDIDX and Gold
