Markets Mixed on Easing of Tensions in Turkey, Lack of Fresh Economic News

James Hyerczyk

The lack of fresh economic news kept a lid on the price action on Monday with very little movement across all financial sectors. The events in Turkey on Friday which caused volatility have subsided, cutting into some of the volatility. Although there are still lingering concerns over Brexit, there isn’t expected to be a renewed reaction to this event until the U.K. makes a formal request to leave the U.K. by filing Article 50.

Early in the session, U.S. stocks are trading marginally higher, driven by better-than-expected earnings from several companies. Bank of America beat Street expectations on earnings and revenue Monday, with earnings per share of 36 cents, compared to an expected 33 cents. BoA is now the third big U.S. financial institution to top second-quarter profit forecasts. Last week, Citigroup and JPMorgan Chase came out strong last week.

There was some minor news from the U.S. Homebuilder sentiment fell 1 point in July according to the National Association of Home Builders. The catalyst behind the weakness was low foot traffic and construction constraints. There was very little reaction to the news, however, with most traders waiting for Building Permit and Housing Start data on Tuesday.

The GBP/USD traded higher on Monday, recovering a portion of Friday’s loss that was triggered by the attempted coup in Turkey when money flowed into the safe-haven U.S. Dollar. The EUR/USD produced a similar move for the same reason on lower than average volume.

The USD/CAD continued to recover from last week’s setback that was triggered by the Bank of Canada’s decision to leave interest rates unchanged. Helping to underpin the Forex pair was a break in crude oil prices and a report that showed a drop in Foreign Securities Purchases from 15.52 billion in May to 14.73 billion in June. Traders were looking for a reading of 15.39 billion.

Despite a slightly higher stock market, August Comex Gold traded firm on Monday, recovering from earlier losses in Europe. Investor jitters following the failed coup in Turkey encouraged some investors to take protection in the gold market. A relatively flat U.S. Dollar also helped underpin prices.

After several days of consolidation, September Crude Oil prices fell sharply as investors shrugged off the impact of the events in Turkey. The market fell nearly two-percent as investors turned their attention to bearish fundamentals. Losses were limited, however, due to disruptions to crude exports in Libya.

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