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On August 20th, Canadian Prime Minister Mark Carney is pushing to end some of Canadas ban on the retail sale of U.S. alcohol, hoping to push for a finalized U.S.-Canada trade agreement. Nova Scotia Premier Tim Houston stated that Carney, during a conference call with provincial premiers on Wednesday, urged them to reinstate the sale of U.S. wine and spirits in their local stores once the agreement is finalized. In Canada, provincial governments are responsible for setting rules for the sale and distribution of alcoholic beverages. Last year, in retaliation for tariffs imposed by the Trump administration, most Canadian provinces removed U.S. alcoholic products from their shelves, leading to a significant decline in export sales for U.S. wine and spirits producers. Currently, most provinces maintain their bans on the sale of U.S. alcoholic beverages, including Canadas three most populous provinces—Ontario, Quebec, and British Columbia. It remains unclear whether the provincial premiers will agree to Carneys request. If they refuse, the preliminary U.S.-Canada trade agreement announced by Trump on Tuesday evening could be at risk. The White House considers ending these bans to be one of the core pillars of any U.S.-Canada trade agreement.According to Nikkei, Japans Ministry of Economy, Trade and Industry will seek 7.7 trillion yen in its fiscal year 2027 budget.Asian stocks are poised for a rebound following the U.S. announcement of expanded Treasury bond buybacks. U.S. stock index futures rose slightly in early Asian trading on Thursday. Most S&P 500 components rose on Wednesday, despite declines in chipmaker shares. Japanese, South Korean, and Australian stock index futures all indicate an upward opening, which should push broader Asian benchmark indices back from two consecutive days of losses. High U.S. Treasury yields have kept borrowing costs high, dragging down economic growth and posing political risks for Trump and the Republicans ahead of the November midterm elections. Investors are demanding higher returns to offset inflation risks, leading to a bond sell-off, and the market is now focused on whether the Treasurys latest move can lower bond yields. "Theres no doubt the U.S. government is very concerned about the bond market again, so theyve given it another shot in the arm," said Matt Marley, chief market strategist at Miller Tabak+. He added that unless investors interpret this as a sign of economic weakness, it could "boost risk assets in the short term."The Russian attack on Kyiv, Ukraine, has killed two people and injured six.Canadian Minister for U.S. Trade, LeBlanc: The Prime Minister had a constructive and important dialogue with the provincial premiers regarding negotiations with the U.S.

USD/TRY reestablishes its annual high on route to 17.00, notwithstanding Erdogan's expectation of future inflation moderation

Alina Haynes

Jun 06, 2022 15:25

 截屏2022-06-06 下午3.23.52.png

 

In spite of Turkish currency (TRY) traders' inflation worries and President Erdogan's efforts to appease TRY purchasers, the USD/TRY continues to trade near $16.36, the highest level since 2022. The pair's upward momentum is influenced by Friday's high Turkish inflation data for May, as well as the US dollar's comeback over the last week, not to mention expectations of the Fed's faster/more aggressive rate rises.

 

According to Reuters, "Turkish President Tayyip Erdogan stated on Sunday that inflation numbers from the month of May, when annual consumer prices soared to a 24-year high, indicate that inflation is now on the down." It is noteworthy that the May inflation rate for Turkey increased to 73.5 percent in the most recent report.

 

Reuters also reported that the lira fell by 44 percent last year and has been the poorest performer in emerging markets for several consecutive years, mostly owing to economic and monetary policy worries under the administration of President Tayyip Erdogan.

 

In contrast, the odds supporting a 0.50 percent rate hike by the Federal Reserve in September have lately increased to 75 percent from 35 percent a week earlier, which emphasizes this week's US Consumer Price Index (CPI) data and favors US dollar purchasers. In spite of this, the US Dollar Index (DXY) reversed a two-week downward trend at Friday's close, trading down 0.14 percent intraday near 102.000 as of press time.

 

US Nonfarm Payrolls (NFP) for May came in at 390K, above expectations of 325K but falling short of the upwardly revised prior readings of 428K. In addition, the unemployment rate stayed constant at 3.6% against predictions of a minor reduction to 3.5%. In addition, the US ISM Services PMI dropped to 55.9 in May, compared to the market estimate of 56.4 and the flash reading of 57.1 in April. Following the release of the statistics, Loretta Mester, president of the Federal Reserve Bank of Cleveland, stated that the Fed's only worry is inflation. The officials underlined that the likelihood of a recession has increased.

 

Wall Street benchmarks finished in the negative and US 10-year Treasury rates saw their first weekly increase in three weeks to reflect the risk-averse sentiment of the previous day. However, S&P 500 Futures increased by 0.5 percent to 4,126 and US 10-year Treasury rates fell by 1.3 basis points (bps) to 2.942 percent as per the most recent data available.

 

Amid a pre-Fed blackout for Fed officials and in anticipation of Friday's US CPI, USD/TRY traders should pay attention to risk drivers moving forward.

Technical Evaluation

A successful breach of the prior resistance line from early January, about 16.45 at the time of publication, would lead USD/TRY values toward the $17.00 mark before testing the late 2021 top at $18.36.


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