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  • Writer's pictureMike Paterson

Markets remain wobbly on Turkey and trade war fears

Monday 13 August 2018

A lot's been going on in my absence with growing concerns over the Turkish economy/extensive debt/European bank exposure with additional pressure from increased US trade tariffs. End result has seen the Turkish lira and other Emerging Market currencies in rapid retreat with a flight to safe-haven currencies and equity markets falling too.

In my last post before my vacation I warned, re the BOE, that "the chances of a 0.25% rate hike are now priced in around 85% so if we do get that rise I do not anticipate too much of a rally once the algos have given it their usual shunt." All as per printed programme so I hope you took advantage. The decision and 9-0 vote saw a small GBP rally but it didn't take long for sellers to take advantage.

GBPUSD has tumbled to post lows of 1.2723 with GBPCHF and GBPJPY supply also notable but finding a little support in recent sessions as EURGBP retreats from 0.9000 (GBPEUR down to 1.1110) as Euro sellers prevail across the board given the ECB's warning on European banks exposure to Turkey.

Immediate support/buying interest now between 1.2720-30 then more into 1.2700, 1.2675-80 and 1.2650.Sellers now poised between 1.2780-2800 and 1.2820 then larger at 1.2850. Brexit fears/uncertainty still prevailing too so keep selling the rallies but beware dip demand given the extensive recent falls.

EURGBP has retreated to test 0.8900 (GBPEUR resistance 1.1230) after that failure into 0.9000 on the general Euro supply. Sellers now poised around 0.8950 then larger between 0.8980-0.9000. Buyers at 0.8900 then larger between 0.8870-80 and 0.8850 still.

EURUSD has finally broken down through stubborn, option contract-assisted support at 1.1500 and 1.1400 to post lows of 1.1364 on those ECB warnings. Sellers now lining up around 1.1400 with larger into 1.1420 then 1.1450.Buyers lined up between 1.1350-60 with more into 1.1330, 1.1300 and 1.1300.

USDJPY is still caught between some general USD buying and JPY safe-haven demand so has seen limited falls but is still lower having fallen back to 110.22 but large option-related demand at 110.00 today should help stem further falls.Sellers poised around 110.50 with larger interest between 110.80-111.00. USDCHF remains underpinned above 0.9900 but also finding sellers on the safe-haven CHF demand with EURCHF tumbling too.

AUDUSD has broken down through strong support between 0.7300-50 but has further option-related demand at 0.7250 and 0.7200. Buyers now at lining up at 0.7250, 0.7220 and 0.7200. Immediate sell interest now between 0.7280-0.7300 then 0.7320 and 0.7350. USDCAD has fallen after a failure at 1.3300 but similarly has found strong support between 1.2980-1.3000 again and rebounded on the general USD demand to range tightly again. Sellers now into 1.3100 and 1.3120 with buyers poised around 1.3150, 1.3120 and 1.3100. The SA Rand remain under pressure amid the the EM currency selling overall.

Fickle and volatile markets still prevailing so get your orders in to take full advantage of these moves.

England's cricketers easily prevailed in damp and dark conditions against a woeful India but the Mighty Shrimpers at Plymouth failed to take full advantage of a bright start and had to settle for a point when all three were up for grabs. Hey ho, early days and still reasons to be cheerful.

Have a good week out there one and all.

Interbank Rate 08.48 BST GBPUSD   1.2742 EURUSD   1.1368 EURGBP   0.8922 GBPEUR   1.1206 USDJPY   110.24 USDCAD   1.3157 USDCHF   0.9951 GBPAUD   1.7528 GBPCAD   1.6767 GBPCHF   1.2681 GBPZAR   18.4867 GBPHKD   9.8789 EURHKD   8.8157

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