· The dollar advanced to a 13-month peak on Tuesday against a basket of major currencies as traders increased their safe-haven holdings of the U.S. currency on worries about the fallout from the Turkish lira’s recent fall.
While the lira rebounded from an all-time low, concerns about European banks’ exposure to the country spurred selling of the euro, sending it to 13-month lows against the greenback and Swiss franc.
An index that tracks the dollar against the euro, yen, sterling and three other currencies touched 96.794, the highest since June 2017. It was last up 0.4 percent at96.762.
The euro declined to $1.1330, the lowest since July 2017, before edging to $1.13335, down nearly 0.7 percent on the day.
· A plunge in the Turkish lira has set off a wave of selling across emerging market assets, reviving fears of contagion that has been the sector’s Achilles heel for decades.
Stock prices fell significantly while government bond yields rose across emerging markets. The bout of selling has taken prices and spreads near their 15-year average, indicating further declines could turn out to be good buying opportunities.
· President Tayyip Erdogan said on Tuesday that Turkey would boycott electronic products from the United States, retaliating in a row with Washington that has helped drive the lira to record lows.
The lira has lost more than 40 percent this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogan’s calls for lower borrowing costs and by worsening ties with the United States, a major NATO ally.
· The interviews showed there is no palpable sense of crisis or panic yet. There is division and confusion over how China should respond to Trump, with some arguing that Beijing should strike back at American interests but others saying they didn’t know what could be done.
If that was representative of the whole of China – and words were turned into action - it might start to put a dent in sales of Apple’s (AAPL.O) iPhones, Disney’s (DIS.N) movies, Starbucks’ (SBUX.O) drinks and General Motors’ (GM.N) cars, among other American products – and that’s without any boycott being organized by the government or activists.
· Oil prices edged lower on Tuesday, weighed down by a strengthening U.S. dollar as investors remained concerned about the financial crisis in Turkey.
Brent crude LCOc1 dipped 15 cents to settle at $72.46 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 16 cents to close at $67.04 a barrel.
Reference: Reuters
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