High volatility continues in European markets after the US markets weakened overnight and then in Asia we saw some strength in the Australian and Japanese markets and continued weakness in China and Hong Kong. The Turkish Lira has regained some strength after the extreme weakness of the past few sessions with an extreme high of 7.2000 on Monday and now a recent low of 6.3300. The threat of contagion and the flow on in the European banks that have lent funds to Turkish corporates has kept the European indices weak with buying of fixed interest bonds as a safe haven.
European indices are performing better this morning with the DAX at 12388 up 30 , the CAC at 5426 up 14 , the FTSE at 7644 up 2 , and the MIB at 21002 up 33 as the selling pressure fades. In the FX markets the US Dollar remains strong with the trend clearly higher and the EUR at 1.1406 flat , the GBP at 1.2775 up 9 , and the JPY at 110.91 weaker by 20. Gold is at 1195 up 1.00 after reaching lows yesterday of 1190. Brent Crude oil futures is last at 73.33 up by 0.72 after a report showed Saudi Arabia , the largest oil exporter , had reduced production in July.
Bond yields have lifted slightly after the economic crisis around Turkey lifted a little and some of the safe haven buying reduced. US10 are now at 2.89% , the UK10 at 1.27% , and the DE10 at 0.33% all up by a point.
In economic data we have seen UK employment reach record levels at 4.0% , French inflation was 2.3% y/y as expected , the Spanish inflation was at 2.25 as expected and finally the EUR GDP was 0.4% q/q and EUR industrial production was down 0.7% m/m.