Emerging Market Rout Spurs Safe Haven Bid in US Dollar

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MARKET DEVELOPMENTS – USD BREACHES KEY RESISTANCE ON EM ROUT

US fairness futures are buying and selling with losses throughout the board as European bourses are dragged decrease by EU banks amid reviews that some banks may very well be uncovered to the drop in the Turkish Lira.

USD: Safe haven flows have flooded into the US Dollar this morning, with the foreign money breaking above YTD highs to commerce above the 96.00. This has largely been because of the promoting seen in the Euro after reviews from the FT that EU banks could also be uncovered by the autumn in the Turkish Lira. Consequently, EURUSD broke beneath key assist at 1.15, buying and selling at across the mid.1.14s. This additionally opens the best way for additional losses to 1.1350. Elsewhere, US inflation stays companies with the core CPI determine posting its largest achieve since September 2018 and as such additional underpinned the USD.

TRY: As talked about, reviews from the FT that the ECB are more and more involved over the publicity that European banks have on the falling Turkish Lira. Prompted a recent report low in the Lira, which hit lows of 6.36 in opposition to the USD, this in flip has sparked a 12% achieve in USDTRY right now. Alongside this, the Trump added to the strain on the Lira by

RUB: Another EM foreign money that has taken successful for a lot of the week is the Russian Rouble, which has fallen to the bottom stage since June 2016 amid considerations over additional sanction measures from the US in opposition to Russia. In response to this potential risk, the Russian PM said that strikes to restrict banking exercise shall be an act of conflict.

GBP: The Pound is softer amid the rise in the USD, nevertheless, losses had been pared barely amid the commonly firmer UK knowledge. UK GDP for Q2 bounced again from the slowdown in Q1, whereas manufacturing, building and industrial had additionally been comparatively firm. However, Brexit continues to be the important thing driver for the Pound in the close to time period.

DailyFX Economic Calendar: Friday, August 10, 2018 – North American Releases

Emerging Market Rout Spurs Safe Haven Bid in US Dollar - US Market Open

DailyFX Webinar Calendar: Friday, August 10, 2018

Emerging Market Rout Spurs Safe Haven Bid in US Dollar - US Market Open

IG Client Sentiment Index: EURUSD Chart of the Day

Emerging Market Rout Spurs Safe Haven Bid in US Dollar - US Market Open

EURUSD: Data reveals 61.0% of merchants are net-long with the ratio of merchants lengthy to brief at 1.56 to 1. In truth, merchants have remained net-long since Aug 01 when EURUSD traded close to 1.15861; worth has moved 1.1% decrease since then. The variety of merchants net-long is 2.8% decrease than yesterday and 8.0% decrease from final week, whereas the variety of merchants net-short is 21.9% decrease than yesterday and 2.4% decrease from final week.

We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests EURUSD costs might proceed to fall. Positioning is extra net-long than yesterday however much less net-long from final week. The mixture of present sentiment and up to date adjustments offers us an additional combined EURUSD buying and selling bias.

Five Things Traders are Reading

  1. US Dollar Maintains Gains as July CPI Report Shows Elevated Inflationby Christopher Vecchio, CFA, Sr. Currency Strategist
  2. EUR/USD Triangle Breakdown Fueling DXY Index Breakout by Christopher Vecchio, CFA, Sr. Currency Strategist
  3. Bitcoin & Ripple Technical Analysis – Charts Point to Further Lossesby Nick Cawley, Market Analyst
  4. GBP Pares Losses as GDP Bounces Back, However, Brexit Remains Key Driverby Justin McQueen, Market Analyst
  5. US Dollar Soars, Gold Slumps, EUR Rattled on Turkish Lira Concerns” by Nick Cawley, Market Analyst

— Written by Justin McQueen, Market Analyst

To contact Justin, e mail him at [email protected]Follow Justin on Twitter @JMcQueenFX



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