EUR 8.46 For Business Accounts Only

The Morning Track not-contained

- The Morning Track – Not Contained by Bob Savage
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The horror of wildfires in the US and globally continues. There is no containment when climate change drives droughts and the tinder of dry forests finds the frailty of human judgement. So too for the markets today. The crisis in emerging markets is not contained even as the TRY gained back to 5.8830 early at the open following headlines that Turkey is doubling US tariffs. The currency is up 3% to 6.15 now after a court in Turkey rejected US pleas to end Pastor Brunson’s house arrest. So TRY is not enough to spread cheer across emerging markets. Start with Indonesia where the central bank hikes 25bps to 5.5% - the fourth hike since May – as the IDR fell 1% at the open bringing another round of intervention. The BI Governor Warjiyo noted, "The reason for the rate hike is to maintain the attractiveness of our domestic financial market, in that we want yields... to remain attractive despite rising risk premiums and that could trigger inflows." Continue onto China where t
he CNY fixed lower and the housing prices rose but the stock market fell. CNY wobbles after weaker data yesterday. Move then to South Africa where the ZAR is off over 3% and focus is on its politics hitting stocks and bonds, weaker metals prices hitting its current account. There is little room for EM to hide today and the pain trade outside of Turkey belies the containment arguments from yesterday. So we are in a risk-off mood and that puts the USD back into the spotlight with the data today looking more important than usual as it will drive FOMC reactions. The risk for 98 US dollar index returns.