Emerging market currencies rise on US-China trade talks, rising Turkish lira

The Turkish lira was 2.1% weaker against the dollar on Monday after President Tayyip Erdogan dismissed the central bank governor, laying bare differences between them over the timing of interest rate cuts to revive the recession-hit economy.

NEW YORK: Emerging market currencies rebounded on Thursday after China said it will hold trade talks with the United States this month and Turkey's lira continued its recovery.

China said that a delegation led by its vice commerce minister would travel to the United States for talks on Aug. 21 and 22, raising hopes that Beijing and Washington may resolve the escalating tariff war that has roiled financial markets since early March.

The Chinese yuan recovered from its weakest level since January 2017, and the dollar moved slightly lower.

"The news of China coming back to the negotiating table is providing relief and you are starting to see markets stabilize a little bit," said Shawn Cruz, manager of trader strategy at TD Ameritrade in Chicago.

The Turkish lira built upon Wednesday's gains, when Qatar pledged to invest $15 billion in Turkey. Other emerging market currencies, such as Brazil's real and Mexico's peso, also rose.

The Turkish lira rose 2.9 percent to 5.7941 per dollar.

On Thursday, Turkish Finance Minister Berat Albayrak assured international investors on a conference call that the country would emerge stronger from its currency crisis and that its banks were healthy.

"The trade talks and the back and forth on Turkey is really going to be the stuff everybody’s watching," said Blake Gwynn, an interest rate strategist at NatWest Markets in Stamford, Connecticut.

Metals prices climbed as well, though MSCI's index of emerging market stocks dipped after having edged up into positive territory earlier in the day.

MSCI's index of world stocks rose 0.6 percent.

Emerging market stocks <.MSCIEF> dipped 0.2 percent a day after falling more than 20 percent from their January intraday high.

In U.S. markets, the Dow Jones Industrial Average  rose 396.32 points, or 1.58 percent, to 25,558.73, the S&P 500 <.SPX> gained 22.32 points, or 0.79 percent, to 2,840.69 and the Nasdaq Composite <.IXIC> added 32.41 points, or 0.42 percent, to 7,806.52.

The pan-European FTSEurofirst 300 index <.FTEU3> rose 0.44 percent.

The Shanghai Composite Index <.SSEC> closed down 0.6 percent, while Hong Kong's Hang Seng index <.HSI> ended 0.8 percent lower. Hopes that China and the United States could ease trade tensions helped Chinese stocks pare losses. [.SS]

In currency markets, the dollar index <.DXY> fell 0.1 percent, while the euro was up 0.27 percent to $1.1374 after closing Wednesday at its lowest point since July 2017.

The Chinese yuan gained 1.2 percent to 6.862 per dollar.

Copper rose 1.54 percent to $5,890.50 a tonne, after having confirmed a bear market on Wednesday when it closed 20.9 percent below its recent high reached on June 7.

Oil also recovered somewhat after Wednesday's slide, though a weakening outlook for crude demand kept prices in check. U.S. crude rose 0.72 percent to $65.48 per barrel and Brent was last at $71.33, up 0.81 percent on the day.

U.S. Treasury yields rose on the news of U.S.-China trade talks. Benchmark 10-year notes last fell 6/32 in price to yield 2.8714 percent, from 2.851 percent late on Wednesday. - Reuters