Last week saw the Turkish Lira continue its plunge against the US Dollar, as the Lira remained the major headline for the majority of the week. At one stage, a drop of more than 7% occurred and the USD/TRY breached 7 Lira per dollar for the first time in its history of trading.
European markets were also subdued seeing the Stoxx and Dax both falling 0.5%, contagion gripping the markets as some of the largest banks in Europe look at their exposures to Turkey, and the effects of a potential fallout to emerging markets globally.
On the data front, the Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months, missing expectations of 22 and posting an 11.9. The Director of real-time economics at Moody’s Analytics, Ryan Sweet, advised this was due to rising trade tensions and tightening financial conditions - all of which has been weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic about the future of the local economy. US Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line with expectations of 1.31M for July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise.
The week closed out with improved market sentiment, as equity markets saw gains across the board and talks of negotiations to calm current trade wars between China and the United States.