(24 AUGUST 2020)DAILY MARKET BRIEF 2: Lira buyers unconvinced by news of Black Sea oil.

The EURUSD kicked off the week on a slightly bearish note. The steady US dollar sent the pair below the 1.18 mark in Asia. The story remains the same: the pair has become a puppet, the direction is uniquely driven by the US dollar appetite, and the overstretched EURUSD pricing continues hinting that there is a greater potential for a meaningful downside correction rather than a further positive push.

Cable is back below the 1.31 mark after last week’s failure to combat offers above the 1.32 mark. While the sell-off in the US dollar keeps the pair above the 1.30 handle, sterling has little merit at the current levels, as the currency bears the brunt of the Brexit uncertainty on top of its economy shattered by the pandemic.

Gold traded a touch lower near the $1930 per oz. Soft US yields and solid inflation expectations should continue giving support to the yellow metal at the dips.

WTI crude shows toppish signs near the $42 per barrel, and the hesitation to buy at the current levels could bring the tactical bears in for a deeper downside correction towards the $40 handle.

Speaking of oil, news that Turkey found oil in the Black Sea causes two-side volatility in the Turkish lira as investors try to put a price tag on the extent of the positive impacts that the latter could have on the country’s balance sheet. Turkey is a net oil importer and domestic oil will certainly help reducing the energy bill meaningfully. But uncertainties regarding how and when the oil could be exploited, and eventually exported, keep short-term buyers on the backfoot and the short-term lira appetite limited. The USDTRY remains on track for further gains, as traders target the 7.50 as the next bullish milestone.