Morning Brief: 22/03/2021
The Turkish lira stole the show during today’s Asian session after the currency plunged on the market opening, following the news that Turkey’s President Recep Tayyip Erdogan sacked the nation’s central bank Governor Naci Agbal over the weekend.
According to reports, President Erdogan was unhappy with the recent 200 basis point rate increase by the now former central bank Governor. Traders sold the Turkish aggressively lower against the greenback on the weekly open, with the pair trading down by as much as 17 percent at one point.
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As the European trading session is getting underway the pair is starting to recover higher and is moving away from the worst levels of the morning. In terms loss the Turkish lira is now around 10 percent lower against the buck.
SocGen, the French investment bank, have stated that Turkey is weeks away from a currency crisis. They bank argue that Erdogan’s action now leaves the country “beyond the point of no return”.
A leading analyst from SocGen noted “Without much remaining reserves to defend the currency and considering an expected exodus in foreign and local investor capital, it may be difficult for Turkey to avoid another currency crisis in the coming months.”
The People’s Bank of China kept interest rate unchanged this morning as widely expected. PBOC Governor Yi Gang, also noted over the weekend that “The PBOC still has room to provide liquidity to the economy, leverage levels are not too high”.
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In terms of other market moves today, the Nikkei 225 has taken a hit over risk-off market sentiment and has lost around 2 percent intraday. The Japanese yen currency has also strengthened as traders move in safe-haven currencies.
The US dollar currency has firmed across the board due to the sentiment shift. The buck has continued last Thursday and Friday’s move higher and is making solid traction against the euro and antipodean currencies.
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Sterling is also subdued due to the weekends news that the EU may block AstraZeneca COVID-19 vaccine exports coming to the United Kingdom. This has raised fears that this move could slow the ongoing vaccine rollout in the UK.
Bitcoin has opened the week on stronger footing after falling towards the $56,000 level over the weekend. Bitcoin traders face a tense week as the top crypto struggles with the $60,000 resistance level and the largest ever option expiration event, which is due on March 26th.
Data Watch
The economic calendar during the European session is fairly subdued, with the German monthly Buba report and seasonally adjust current account data from the eurozone economy being released.
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All eyes will be on a scheduled speech from FED Chair Jerome Powell during today’s US trading session, as the United States central bank head delivers his latest thoughts on the US and global economy.
A number of Federal Reserve speakers will be out on the wires today after Chair Powell’s speech. FED members Daly and Quarles are set to talk after FED Chair Powell during the US session, while FED member Bowman is also set to speak after Wall Street closes.
