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Turkish lira (slowly) gains investors’ support

By Swissquote Bank Research Team

Even after raising interest rates during its MPC (Monetary Policy Committee) on 13 September, the CBRT (Central Bank of Turkey) failed to convince market participants sufficiently. Key issues relating to spreading inflation, shown by the September CPI (Consumer Price Index) at 24.52% on a yearly basis (m/m: +10.88%) and expected to head above 25% by year end, along with the question of the independence of the CBRT, have put constant pressure on the Turkish lira. But the trend appears to be changing.

Indeed, after the Turkish authorities complied with US demands to release Pastor Andrew Brunson following a court decision last week, the lira has been gaining ground since last Thursday, trading below the 6 range against the greenback and appreciating by 4.75% since then. For now, it appears that investors have finally decided to support the lira, although the forthcoming CBRT MPC meeting of 25 October could turn out differently than expected. Investors are expecting a 300 bps rate hike. If the central bank disappoints, the risk of an extra collapse of the Turkish lira has not disappeared.


EUR/NOK seen slipping back to 9.10 in 12-month – Danske Bank

By Pablo Piovano

Senior Analyst at Danske Bank Kristoffer Lomholt sees the Norwegian Krone appreciating further in the next months.

“EUR/NOK has re-settled in the lower end of the 9.40-9.60 range following a turbulent month where fading NOK headwinds were countered by a dovish Norges Bank and tumbling risk sentiment”.

“We still expect EUR/NOK to move lower on valuation and that Norges Bank has indicated in its base case already that it will out hike peers. In our view, market pricing of Norges Bank remains too soft but we are likely to have to wait for a significant repricing”.

“With year-end creating an asymmetric balance of risk to foreign developments, this creates a tougher environment for EUR/NOK to break below the 9.40 threshold this side of New Year”.


USD/CAD stuck in a range below 1.30 handle

By Haresh Menghani

The already weaker US Dollar was further weighed down by the disappointing release of US monthly retail sales data, while the Bank of Canada Business Outlook survey report fueled rate hike expectations and underpinned the Canadian Dollar.

The pair, however, managed to find some support at lower levels and managed to rebound around 35-pips from daily lows, albeit lacked any strong follow-through amid a subdued USD demand.

Meanwhile, a weaker tone around crude oil prices, which tend to dent demand for the commodity-linked Loonie, extended some support and might now help limit any immediate sharp downside, at least for the time being.


Sony Could Rally 30% on Record Earnings

By Shoshanna Delventhal

With the once red-hot technology sector experiencing a period of heightened volatility, shares of Sony Corp. (SNE) could prove themselves a safe bet for investors seeking to harness above-average returns. Ahead of the electronic giant’s upcoming earnings report, the consensus on the Street implies a near 24% gain for Sony stock over the next 12 months, according to data from Reuters.

The average analyst rates Sony at outperform, with a mean price target at 7,730.50 Japanese yen, or $69.15, compared to the average price target three months ago, at 6,587.27 yen, or $58.87.

The Street has become increasingly bullish on Sony’s growth prospects in the gaming and image sensor business, expecting the firm to report a record operating profit for the fiscal year ending March 31, 2019.

On Friday, an analyst at Nomura Instinet lifted their price forecast for Sony stock to 8,000 yen, or $71.42, reflecting a 27% upside from current levels, as outlined by CNBC.

“Strong performance in these content-related areas means that near-term earnings have probably been better than we had previously expected,” wrote the analyst.

Okazaki noted that while a strengthening U.S. dollar remains a risk for hardware manufacturers, Sony’s “high-value-added strategy” should outweigh the negative headwind.

Despite risks, the average earnings forecast for Sony’s fiscal year 2019 calls for record operating profit at 794.71 billion yen, or $7.1 billion, and implying an 8.9% YOY increase from 729.9 billion yen, or $6.52 billion reported in fiscal year 2018.


Gold holds steady below 2-1/2 month highs, around $1230 level

By Haresh Menghani

Gold traded with a mild positive bias on Tuesday and remained within striking distance of 2-1/2 month high, set in the previous session.

A combination of positive factors helped the precious metal to build on last week’s strong bullish momentum and lifted it to an intraday high level of $1233.30, the highest since July 26.

Rising diplomatic tensions between Western powers and Saudi Arabia, over the disappearance of journalist Jamal Khashoggi, was seen underpinning the precious metal’s safe-haven status.

This coupled with some renewed US Dollar selling bias, further aggravated by Monday’s disappointing release of US monthly retail sales data, provided an additional boost to the dollar-denominated commodity.


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