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By xemarketanalysis January 10, 2017 10:42 am
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    XE Market Analysis: Turkish Lira Hits Fresh Record Lows

    OVERVIEW

    • Markets are generally subdued amid a lack of significant economic data as investors await the President-elect's press conference tomorrow.
    • Chinese consumer price inflation slowed to 2.1% in December, but producer prices surged at their fastest pace in 5 years as the price of coal and other raw material jump. 
    • The British Retail Consortium reported a pickup in sales in December, with the Christmas week boosting annual like-for-like sales by 1%.
    • Norwegian consumer prices were much weaker than expected, falling 0.5% month-on-month in December raising the prospect of a rate cut as the economy remains weak.
    • Oil prices fell over 3% yesterday as details of the OPEC deal to cut production emerged, showing a number of countries opting out of the cuts.

    HIGHLIGHT

    The Turkish Lira has posted fresh record lows today, losing almost 2% against the US Dollar as the combination of weaker economic growth, rising inflation, and terror attacks all weigh on the currency. The central bank cut the required foreign exchange reserves that frees up $1.5bn to use for intervention, but the Lira's limited gains were quickly wiped out, leading the deputy PM to say the economy was being targeted by "sabotage and attacks".

    US DOLLAR

    The Dollar is flat on the day with investors treading with caution ahead of Donald Trump's press conference tomorrow that is likely to be less scripted than his inauguration speech next week. This makes it less predictable in terms of what he will say and may be an opportunity for him to provide some insight into which election pledges he will actually pursue.

    BRITISH POUND

    The Pound continued yesterday's slide in early morning European trade, hitting two-month lows against both the Dollar and the Euro before recovering to trade flat on the day. The Pound remains hostage on comments of Brexit, but it does look a little oversold in the past week against its two major counterparts that are not without their own political uncertainties.

    EURO

    The Euro is also flat on the day versus the Dollar, having been unable to hang on to an earlier rally that saw it strengthen its recent highs over the past month. The single currency has taken a breather after its recent slump against the Dollar, however looking ahead the Euro has some major event risks coming up in the Dutch, French, and German general elections.

    CANADIAN DOLLAR

    The Canadian Dollar is marginally higher on the day, close to its recent highs against its US counterpart after stronger than expected building permits for November. They were forecast to have declined 5% after surging by almost 9% in October but they were unchanged as the housing market remains on a strong footing.

    AUSTRALIAN DOLLAR

    The Australian Dollar is higher today against the US Dollar, despite weaker than expected Australian retail sales for November which rose just 0.2%. Strong employment and a recent pick-up in consumer sentiment have left expectations for Australian interest rates to be kept on hold over this year, which combined with better Chinese data, have helped the Aussie recover from 7-month lows.

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