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July 2nd - Two sources familiar with the matter revealed that Japan is gradually reducing its practice of issuing early warnings of intervention risks, instead taking more targeted actions to combat speculators and increase the cost of shorting the yen. The sources stated that, unlike previous cautious verbal warnings before intervention, the Ministry of Finance may suddenly intervene to clear speculative yen positions. Officials are also avoiding mentioning any specific "bottom line" exchange rate levels that might trigger intervention. This shift reflects a more aggressive strategy from the Ministry of Finance, using silence as a policy tool to make the market unpredictable. The sources indicated that this increases the risk of sudden intervention, and the driving factor for this intervention may be the accumulation of speculative short yen positions, rather than the yen exchange rate breaking through a publicly recognized threshold. Two other sources said that this move by the Ministry of Finance, along with the Bank of Japans continued hawkish rhetoric, indicates that both sides are taking coordinated action to curb yen shorting.The yield on Japans 30-year government bonds rose 4.5 basis points to 4.000%, the highest level since May 22.Nvidia: Will partner with AI Cloud to deploy large-scale, multi-tenant AI factories using a revenue-sharing and credit-support model.July 2nd - Recently, the China Meteorological Administration, in conjunction with the National Development and Reform Commission, issued the "National Meteorological Development 15th Five-Year Plan". The plan clarifies that by 2030, significant breakthroughs will be achieved in key meteorological technologies; artificial intelligence will be deeply integrated into the meteorological field; the monitoring, forecasting, and early warning capabilities for extreme weather will be significantly improved; major progress will be made in Earth system forecasting and the construction of Earth system data platforms; meteorological data elements will become an important driving force for economic and social development; and the ability to coordinate development and ensure meteorological safety will be comprehensively enhanced. my countrys overall meteorological strength and international influence will be greatly enhanced, with meteorological science and technology, monitoring, and forecasting capabilities reaching world-class levels; meteorological services will achieve world-leading status; and China will become an important force in global meteorological governance.Market sources say Japan is gradually reducing its practice of issuing early warnings and interventions to focus instead on cracking down on speculators. The timing of interventions is not targeted at the yens level, but rather aimed at preventing excessive depreciation.

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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