The dollar rallied Monday after forecast-beating U.S. retail sales data bolstered expectations that the Federal Reserve will hike interest rates this year, while the Turkish lira recovered after being hit by the weekend’s attempted coup.
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The British pound rose to 140.77 yen GBPJPY=R, having recovered about nine percent from the 3 1/2-year low of 129.05 yen hit in the wake of the European Union referendum.
“It is no secret that a significant portion of the investor base is very sensitive to concentration of more power in Erdogan’s hands, and they will be turned off by strengthening of Erdogan’s position following the coup attempt”, Finansbank chief economist Inan Demir said.
Expectations that central banks around the world will introduce fresh stimulus for their economies lit a fire under equities and high-risk assets last week, while confidence was further boosted by another round of upbeat USA data. Bank of America Corp. was little changed after the second-biggest US bank by assets said second-quarter profit fell 21%. Australia rose 0.5 percent.
Meanwhile, the average asking price of a house in the United Kingdom dipped 0.9 percent in July from the previous month, property tracking website Rightmove said – coming in within usual expectations of the slower summer selling season. Enbridge Inc. shed 0.4 per cent to $53.72, while Suncor Energy Inc., the country’s largest oil and gas producer, lost 0.5 per cent to $35.91.
However, shares in tour operators Thomas Cook and TUI both fell, as analysts saw an attempted coup in Turkey as hitting tourism companies for whom Turkey is a key holiday destination.
The heavyweight financials group gained 0.3 per cent, while industrials rose 0.7 per cent, led by Canadian National Railway Co.’s 0.9 per cent advance to $81.27. The Standard & Poor’s 500 index slipped 2.01 points, or 0.1 percent, to 2,161.74. The contract rose 27 cents on Friday to close at $45.95. Despite the swift resolution and a host of reassurances from Turkish policymakers, Turkish stocks posted their biggest daily fall in 2-1/2 years. Brent crude, the global benchmark, was down 46 cents at $47.15 a barrel but above Friday’s low of $46.65. The lira has falledn 1.5 percent versus the dollar for the year.
The dollar index was little changed at 96.541.
On Friday the Turkish Lira suffered the biggest one-day drop since October 2008 following the alleged failed military coup attempt in the country – the TRY/USD fell as much as over 4.5% to the 3.0157 level which it had not visited since January 2016. It was last up 1.4 per cent at 2.98 lira.
In commodity markets, spot gold eased a touch to $1,333.78 per ounce.
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Friday’s attempted military coup prompted the U.S. Department of State to extend its travel warning for Turkey, asking Americans to “reconsider travel to Turkey at this time”.
