After descending to the significant 1.1300–1.1350 support, the euro has rebounded against a sliding dollar brought about by a more stable Turkish lira, Donald Trump’s Monday evening tweets, and the mounting legal woes of Michael Cohen, Mr Trump’s former lawyer.  After a calm day on Monday, Donald Trump once again lashed out at the Fed. He said he was “not thrilled with [Fed Chairman Jerome Powell’s] raising of interest rates”, and that the institution should pursue a more accommodating policy when, according to him, the European Central Bank and the People’s Bank of China are pursuing ultra-accommodative policies to keep their respective currencies at lower levels and boost their economies. For his part, Mr Powell is scheduled to speak on Friday during the second day of the Jackson Hole Symposium in Wyoming, USA, an annual gathering of economists and central bankers. Investors will be paying close attention to what he has to say, as well as to the latest FOMC minutes, which will be published tonight. Although Donald Trump’s remarks should not change the Fed’s decisions, with Jerome Powell having said in the past that they do not take into account political considerations, the central bank cannot remain completely insensitive to the President’s comments.

In the eurozone, the inflation rate rose to 2.1% driven by rising energy prices. This is slightly above the 2% target, but if we ignore the energy and food costs, the increase is only 1.1%.

The Turkish lira, which had recovered up to 5.70 lire to the dollar last Thursday, slid once again to pass the 6-lire mark. US pastor Andrew Brunson remains under house arrest after an appeal for release was rejected by a higher court. For their part, S&P and Moody’s announced that they were lowering the country’s credit rating on Friday to B+ stable and Baa3 negative, respectively. In contrast, the emir of Qatar announced that his country would make $15 billion in direct investment to Turkey during a meeting with President Erdogan.  US National Security Advisor John Bolton said yesterday in an interview in Israel that Turkey could end the crisis instantly by unconditionally releasing the US pastor. “The Turkish government made a big mistake in not releasing Pastor Brunson. Every day that goes by that mistake continues, this crisis could be over instantly if they did the right thing…”, he said.  This morning the Turkish currency traded at 6.0875 lire to the dollar.

Wall Street is celebrating a milestone today. The New York Stock Exchange will have experienced its longest bull run since WWII, having gone 3,453 days without experiencing a fall of 20% or more. S&P 500’s previous record lasted a day less and ended with the bursting of the dot-com bubble in early 2000. This new, record-breaking rally n began in March 2009 after the financial crisis that had seen more than half of the stock market value of the S&P 500 go up in smoke. Yesterday, the S&P index touched an all-time high during the session, supported by the hope of an easing of tensions between Washington and Beijing and the publication of corporate profits that were deemed once again encouraging. Nearly 80% of S&P 500 companies outperformed Wall Street’s expectations in the second quarter, compared to a typical rate of 64%. The record now stands at 2,873.23 points

On the coming days, we await the latest FOMC meeting minutes, to be published tonight, and the summit of central bankers at Jackson Hole from Thursday to Saturday, which will draw most of the attention of investors. With the exception of the Bank of Canada and the Bank of Australia at the beginning of next month, we will have to wait until mid-September for the series of monetary policy meetings of the main central banks.


EUR/USD  1.1565 DOW JONES 25’822.29
USD/CHF  0.9845 SMI 9‘082.86
EUR/CHF  1.1385 BRUT 66.13
USD/RUB  67.40
XAU/USD  1’193.00