Global stocks markets rallied (most of them for the fourth day) on Thursday, led by a 1% US tech recovery and some easing in trade tensions. The S&P closed 0.5% higher. The dollar fell across the board yesterday, moving under the confluence of a disappointing US August CPI which fell back to 2.7% (from 2.9% in July) and which contrasted with the ECB President M. Draghi expressing optimism in achieving its inflation objective. Speaking after the council, he confirmed the ECB will slow asset purchases next month and anticipates phasing them out by year-end. The ECB President also said a solid EU economy was weathering US trade threats, contributing to bolster most EUR pairs’ sentiment yesterday, some of which broke important technical levels. EM currencies also gained for a third day, supported by 3% TYR gain that followed the central bank’s unexpected large rate 6.25% rate hike (to 24%) decision that was seen bolstering or restoring the credibility of the central bank which acted 2 hours after President Erdogan expressed his preference for not raising rates (perhaps it was a Presidential theater but it was well played and good news in any case). RUB rallied for third day as well as did MXN and most other EM while the Argentine peso stood out as the exception shedding 3% despite the central bank keeping rates at 60%. Gold initially rallied on news of an underwhelming US CPI but later shed those gains dropping USD4, staying above USD1200 and preparing the ground for more near term gains in our view. Copper rallied +0.6% to a two weeks high on easing trade tensions as Treasury Secretary Steven Mnuchin reached out to Beijing to propose fresh talks to avoid an escalation of trade war.
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