Equities slide and the euro falls as Turkish turmoil wreaks havoc

Investors are now awaiting the release of the US consumer price inflation for July for clues on the interest rate outlook and to gauge if new import tariffs were starting to have an impact. The data is expected to show inflation increased 0.2%, after rising 0.1% in June.

The Australian dollar — often viewed as a proxy for global risk appetite because of its commodity reliance — was the biggest faller among developed currencies, down 1% on the day. Going in the opposite direction was the safe-haven Japanese yen, which hit a one-month high against the dollar.

The dollar index, which measures the greenback’s strength against a group of six major currencies, breached the 96 level, taking it to its highest level since July 2017.

Adding to emerging market currency woes was the Russian rouble, which weakened to 67.12 to the dollar.

Overnight it had retreated to its lowest since November 2016 on threats of new US sanctions, weakening beyond the psychologically important 65 to the dollar threshold.

“Other EM [emerging-market] currencies have held their ground against the dollar, having generally been weakening previously,” said analysts at Capital Economics.

“In most cases though, we suspect that this resilience will prove temporary,” they said, highlighting the expectation of rising US interest rates and worry over growing US protectionism.

In commodities, US crude oil fell 0.5% to $66.51 a barrel, while Brent crude was 0.4% lower at $71.77 a barrel.

Despite the broader flight to safe havens, gold was lower.

Spot gold fell 0.3% to trade at $1,207.15/oz.

Reuters