Hope you’ve had a good weekend. Lots of ‘news’ in the news, plus the calendar is full which is a welcome relief.
I’ll deal with the Turkish (TRY) issue in the EUR section below, however it makes any problems we are experiencing in the UK pale into insignificance. Forget ‘no deal’ Brexit chatter today, just read last weeks blogs as nothing of significance has happened over the weekend. More importantly, we’ve got average earning, consumer price and retail sales figures all this week, that will give us a proper reflection on how we are all coping amongst the political turmoil. No further weakness from Friday, this is good news as we appeared to have drawn a line in the sand and holding at these levels.
On a different note, 1FX was at a ‘Bank of England’ lunch on Friday. We have to adhere to ‘Chatham House Rules’ however the economic outlook appeared generally positive, even after we dug a bit deeper during our Q&A. Feel free to get in contact for a deeper conversation.
EUR has been very much dragged through the mud with the Turkish situation at the moment, weakening the EUR by 0.8% from Friday’s lows against GBP. Rumours are rife that the European Central Bank had concerns about banks in Spain, Italy and France and their exposure to Turkey. Elevated inflation is the fundamental issue in Turkey, reducing household purchasing power, therefore having a knock on effect on all other major fundamentals. The only way this can be rectified is if the central bank steps in, and hike the interest rate enough to restore its credibility. Continue to see EUR wobble whilst this storm is brewing.
Plethora of data this end too much like GBP, kicking off tomorrow.
Very much a ‘safe haven’ currency at present. Continual USD strength as people would rather hold assets in America, rather than EUR and GBP. No surprises here either:
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) 10 August 2018
USD retail sales are the only top tier bit of data from this side of the pond, but expect the headlines to be focused on the trade war with China this week.
Any questions do not hesitate to get in contact. Have a good day.