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August

Turkish Lira continues to tumble, dragging others with it

Published: Monday 13 August 2018

  • Quiet Monday but Brexit and Trump will keep week busy
  • Economic warfare?
  • Markets will be volatile
​​By David Johnson

The Euro is the main cause for concern for most traders today. The dive in the value of the Turkish Lira has created a lot of concern for European banks with large Turkish exposures. The Turkish central bank has announced a number of measures to calm the markets but they look like they will have only a moderate impact. The Lira has lost 75% of its value against the Euro since the start of the year and these measures don’t look like they have abated that decline. The Turkish President has used language he is clearly comfortable with in declaring this is economic warfare and proclaiming Turkey will prevail. Few believe the rhetoric, but there have been few occasions on which the international press and public have believed anything this president has said.
 
Economic warfare?
 
The Russian Prime Minister is also talking about economic war, as the US seeks to curb the activities of Russian banks, but other emerging market currencies are in trouble as investors do this curious thing of linking any economy with ‘emerging’ in front of its name to every other emerging market. The Indian Rupee, for example, has hit a fresh low and may weaken further today as inflation data is released.
 
Light data today – but tomorrow’s a different story…
 
Other than Italian inflation data, there is very little tier one data to be released today. With the Pound stable around €1.12 and $1.28, the US Dollar strengthening across the board and the Euro in retreat, we are likely to see more of the same in all areas today.
 
Tomorrow is a very different matter, though. We will get a stack of data from China, the significant ZEW survey from Germany and employment data from the UK. We will also get UK Retail Sales data this week, as well as Eurozone and Canadian inflation data. 
 
Markets will be volatile
 
So, it will be a big week for data and reasons for market movement. Aside from the hard statistics, we are also into another round of Brexit negotiation and there will undoubtedly be more from the US President’s Twitter account. Whether that is a good or a bad thing remains to be seen.
 
To me, to you… with love
 
And I loved the crowd at Barry Chuckle’s beloved Rotherham United chanting ‘To me, to you’ as players passed the ball between them. That is the quirkiest but coolest tribute to the kids’ TV performer who recently lost his life. His brother was at the match against Ipswich Town and he applauded the crowd. 

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