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Lira Crisis Takes Focus Away From G10 FX

FOREX
  • Tuesday's G10FX moves were a sideshow for the rapidly accelerating depreciation of the Turkish Lira. USDTRY was up over 18% at its peak where the currency pair printed a high of 13.4539.
  • As of writing, USDTRY gains tally 11.5% as President Erdogan met with the central bank to discuss the Lira slide – bringing some momentary consolidation amid extremely thin liquidity conditions.
  • Contagion risk amid higher US yields impacted other emerging market currencies with USDMXN rising well over 1% and narrowing the gap to the year's highs above the 21.00 mark.
  • The greenback consolidated on Monday's gains and the dollar index remains at its best levels for 15 months. EURUSD lacked direction holding at the midpoint of its 50 pip range around 1.1250.
  • Heavy equity indices prompted some initial Yen strength on Tuesday. USDJPY after breaking 115 overnight had a sharp reversal to 1.1449, however, markets remain in dollar dip-buying mode and the pair trades back above 115, approaching the US-APAC session crossover.
  • The Swedish Krona was a notable underperformer as EURSEK rose 0.7%. This extends the currency pairs winning streak to four days following the break back above the 10 handle – an important pivot inflection point.
  • The main event overnight will be the RBNZ decision/statement where the board may have a close decision between a 25 or 50bp hike.
  • German IFO and the second reading of US GDP will precede US Core PCE data on Wednesday. The FOMC minutes will also be published before Thursday Thanksgiving Holiday.
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