Turkish lira really having a hard time

[247trader]

Looking like a really tough time for the Lira. In just one year it has devalued maybe 40% against the USD which is crazy. You'd have some good holidays on the cheap if you're looking for a last minute get away! Seems to be at a point of resistance at the moment but rising volume and higher lows....

 

[JamesIG]

Copied across your line of resistance on this one and seems like it smashed through last night but has since pulled back, possibly to test that support (once resistance) line... 

Looks like retail traders are bidding the dip according to Bloomberg >> https://www.bloomberg.com/news/articles/2018-07-12/turkey-lira-rebounds-from-record-as-retail-traders-buy-into-dips 

More news here: https://www.bloomberg.com/quote/USDTRY:CUR

[Ludwik Chodzko-Zajko IG]

@247trader  you're right, very tough time.  TRY could have a lot further to go over the next few weeks if Erdogan starts putting pressure on the central bank or, worse, curtails it's independence.

He's still fixed on lowering Turkish CB rates, and has appointed his son-in-law as finance minster (make of that what you will).  Has called interest rates  "the mother and father of all evil" & believes (unconventionally) that higher rates lead to higher inflation.  https://www.reuters.com/article/us-turkey-currency/turkish-lira-hits-record-low-after-erdogan-interest-rate-comments-idUSKBN1K20UQ

From a trading POV, TRY is very popular with both retail and institutional clients as a carry trade, in which you hold a long TRY position overnight to benefit from the positive swap rate. A falling TRY combined with Ergodan's (apparent) desire to cut CB rates might mean the end of a viable carry trade, and cause further downwards pressure should traders decide to liquidate/ switch to another high interest currency. It's difficult to gauge the impact of this as the vast majority of FX is OTC, but certainly a major factor. https://www.bloomberg.com/news/articles/2018-07-09/emerging-market-carry-trade-makes-comeback-as-dollar-rally-fades

Either way likely to be extremely volatile for a good few months, one to watch.

[Ludwik Chodzko-Zajko IG]

TRY now tanking following unchanged central bank rates...

[Caseynotes]

Market wrong footed expecting a rate rise, this from Bloomberg early this morning.

https://www.bloomberg.com/news/articles/2018-07-24/lira-traders-brace-for-turkish-central-bank-s-last-chance-saloon

[Ludwik Chodzko-Zajko IG]

Always enjoy reading these post decision. 

With most economists forecasting a hike, Aberdeen Standard Investments says the lira could tumble some 25 percent to an all-time low of 6 per dollar if officials surprise markets by not acting. - seems slightly too extreme.

IMO Turkish central bank would look to take action before this point (5 per dollar is a big psychological barrier) but as always the Erdogan wild card remains in play, if he ties their hands who knows.

 

 

 

 

[Ludwik Chodzko-Zajko IG]

USDTRY >5

Very important level (as previously mentioned). All eyes on the Turkish CB / govt. for any reactions. 

[phillo]

[phillo]

& the trend continues

[trade247]

5 minutes ago, elle said:

& the trend continues

my channels and fib. Now we're out the channel i'd be confident holding to the 52800 mark... however would reduce a little now and then average out going towards that level. We only need a bit of macro news for this to reverse.

[Ludwik Chodzko-Zajko IG]

TRY keeps on plummeting, you'd think central bank intervention is likely at some point (possibly 13th September, next MP meeting).

Turkish CPI inflation now predicted (some might say optimistically) by the CB to be 13.4% in 2018.

 

[Guest CatinBox]

It is interesting 

 

[Caseynotes]

@Ludwik Chodzko-Zajko IG, that next monetary policy rate decision on the 13th September seems a long way away and that chart doesn't look like stopping any time soon. 50,000 is long gone and though the committee wont like the embarrassment of getting it wrong just 2 weeks ago they may well have to step in earlier on this one.

[Ludwik Chodzko-Zajko IG]

2 minutes ago, Caseynotes said:

@Ludwik Chodzko-Zajko IG, that next monetary policy rate decision on the 13th September seems a long way away and that chart doesn't look like stopping any time soon. 50,000 is long gone and though the committee wont like the embarrassment of getting it wrong just 2 weeks ago they may well have to step in earlier on this one.

Fair point, but difficult to know for certain with Erdogan breathing down their necks. 

[trade247]

https://www.zerohedge.com/news/2018-08-06/turkish-lira-barely-moves-after-central-bank-boosts-dollar-liquidity

[Ludwik Chodzko-Zajko IG]

Historic FT headlines on the TRY for perspective.

Sep. 5, 2013 Turkey opts for stable interest rates as lira hits record low

Jan. 16, 2014 Turkish lira hits new record low vs dollar

Dec. 14, 2014 Turkish lira hits all-time low as Erdogan takes EU to task

Apr. 15, 2015 Turkish lira hits record dollar low

Apr. 24, 2015 Turkish lira sinks to record low

June 8, 2015 Turkish lira hits low after election

July 15, 2016 Turkish lira in steepest fall since 2008

July 20, 2016 Turkish lira falls to new record low on S&P downgrade

Oct. 10, 2016 Turkish lira tumbles towards record low

Oct. 13, 2016 Turkish lira sinks to fresh all-time low

Oct. 17, 2016 Turkish lira hits record low (again)

Oct. 28, 2016 Turkish lira at another record low

Nov. 7, 2016 Turkish lira hits lowest level since at least 1981

Nov. 8, 2016 Turkish lira rout deepens to hit fresh all-time low

Dec. 1, 2016 Turkish lira slumps back towards record low after Opec deal

Jan. 3, 2017 Turkish lira falls to record low as higher inflation spurs selling

Jan. 5, 2017 Turkish lira suffers fresh blow amid ratings junking fears

Jan. 11, 2017 Lira suffers 4% plunge – steepest since failed coup

Nov. 21, 2017 Turkey’s central bank takes action as lira hits record low

Apr. 6, 2018 Turkish lira hits record low as political risks cast pall

Apr. 9, 2018 Turkish lira hits new low as Erdogan chases high growth

Apr. 10, 2018 Turkish lira strikes another record low on growing outflow fears

May 3, 2018 Turkish lira sinks to new record low as inflation rises

May 14, 2018 Lira hits low after Erdogan stamps authority on monetary policy

May 15, 2018 Turkish lira touches yet another low as Moody’s warns on bank risk

May 21, 2018 Turkish lira extends declines with heavy drop to new record

May 22, 2018 Lira swings to new record low in abrupt move

May 24, 2018 Turkish lira resumes slide despite rate hike

June 15, 2018 Turkish lira slides almost 6% in worst week in a decade

July 11, 2018 Turkish lira hits record low against the dollar

Aug. 1, 2018 Turkey’s lira weakens to fresh record low against dollar

Aug. 3, 2018 Turkish lira hits fresh historic low

Aug. 6, 2018 Turkish lira plumbs new low after central bank’s policy tweak

(which I shamelessly stole from here: https://qz.com/1350332/the-relentless-decline-of-the-turkish-lira-as-told-through-exasperated-financial-times-headlines/)

 

 

[Caseynotes]

Ha yes, 2018 a clear winner with 14 points followed by 2016 with 9 while 2017 comes in third.

But if there's one thing Erdogan does well it's soaking up pressure;

 

[phillo]

[phillo]

[Ludwik Chodzko-Zajko IG]

TURKISH LIRA DROPS 13.5% TO 6.30 VERSUS THE DOLLAR - will post more when possible, be careful- huge vol. spike this AM

[JamesIG]

Don't forget that you can use the IG trading platform 'NEWS' section to get full articles and snippets direct from Reuters and other news sources. Navigate to the left hand side of the new trading platform, click on news, and then sub categorise by asset type. 

I personally have this always open within my dealing platform (however I do have a multi screen display and this may no be practical for others - especially if you are on a laptop). If it isn't you could also use the twitter feed on the right hand side (again always open for me) or just have the news section in a tab. 

Directions below

1. News tab in fly out
2. Categories
3. Specific article above

[Guest PandaFace]

That’s a massive movement! Reports that this could spill out to the wider eurozone is pushing the equity markets down at the moment. Euro certainly pulling back and weakest level in a year or so. 

Trukish president to talk today I believe for the first time since the recent sell off. 

[Ludwik Chodzko-Zajko IG]

26 minutes ago, PandaFace said:

That’s a massive movement! Reports that this could spill out to the wider eurozone is pushing the equity markets down at the moment. Euro certainly pulling back and weakest level in a year or so. 

Trukish president to talk today I believe for the first time since the recent sell off. 

Meant to be 12:00 BST (14:00 Ankara). 

As an FYI, we've gone much wider on minimum non-gs stop distances (to prevent you opening and being closed immediately by spread).  Mkt spreads were exceptionally wide this morning, I expect the same throughout any speeches/ press releases.

Underlying TRY tom-next mid has also rallied 15.67% to just under 30 pts. This will likely mean it's very expensive to hold Lira shorts overnight, so please consider this going forward. You can see a (slightly delayed) indication in your watch-list. 

 

[trade247]

Thanks @Ludwik Chodzko-Zajko IG and @JamesIG - never really used that news feature before, always more on twitter and external sites but it's good.

fingers on the pulse for 12 then fellas

[247trader]

I shouldn't laugh but this just came through from Bloomberg on my email.... That title

[Ludwik Chodzko-Zajko IG]

So 2 speeches from Erdogan at 12:00 and 14:30 UK time (now!).

Finance minister (Erdogan's son-in-law) meant to speak at 12:30 UK time. 

Hold on to your hats.

[Caseynotes]

From Gellos Capital a few minutes ago on the exposure of EU banks.

Macro @fxmacro

all kicked off last night as two sources from the ECB concerned about European banks' exposure to Turkey.

Highly probable Turkish borrowers may not be fx hedged and could default on currency loans...$80bio Spanish and $40bio french banks.

[Caseynotes]

On the back of Erdogan defiance Trump puts the boot in by raising tariffs on Turkey, usdtry going into orbit.

[Ludwik Chodzko-Zajko IG]

Erdogan: "Ignore forex prices" 

 

 

[trade247]

get the votes in...