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On May 27, the Taiwan Affairs Office of the State Council held a regular press conference. A reporter asked: Regarding Lai Ching-tes speech on the second anniversary of his inauguration, some media outlets in Taiwan have pointed out that the DPPs current strategy has gradually shifted from pursuing "de jure Taiwan independence" to "substantive Taiwan independence in terms of identity and culture." What is your comment on this? Spokesperson Chen Binhua stated that there is only one China in the world, and Taiwan is a part of China. This is an unshakeable historical and legal fact, as well as a universal consensus of the international community. We will never tolerate or condone any form of "Taiwan independence" separatist activities.On May 27, the State Council Information Office held a press conference on the theme of "Starting the 15th Five-Year Plan," introducing the relevant situation of "Promoting the Rule of Law in All Aspects." At the press conference, Huang Wei, Deputy Director of the Legislative Affairs Commission of the Standing Committee of the National Peoples Congress (NPC), introduced the implementation of the 15th Five-Year Plan outline and the legislative plan of the NPC Standing Committee. 2026 is the first year of the 15th Five-Year Plan, with 15 draft laws scheduled for continued deliberation, 19 draft laws scheduled for initial deliberation, and some projects to be reviewed in advance. Regarding accelerating the construction of a high-level socialist market economy system, the government will formulate the Law on Farmland Protection and Quality Improvement and the State-owned Assets Law, and amend the Enterprise Bankruptcy Law, Trademark Law, Certified Public Accountants Law, Enterprise State-owned Assets Law, Bidding and Tendering Law, Government Procurement Law, Price Law, Agriculture Law, and Tax Collection and Administration Law. The government will accelerate legislation in the financial sector, formulating the Financial Law and the Financial Stability Law, amending the Banking Supervision and Management Law and the Peoples Bank of China Law, and focusing on strengthening research and argumentation work on other legislation and amendments in the financial sector.On May 27, Teng Jiguo, Deputy Secretary-General of the Central Political and Legal Affairs Commission, stated at a press conference held by the State Council Information Office that during the 15th Five-Year Plan period, strict law enforcement will be further promoted. The government will punish, according to law, illegal and criminal activities that have drawn strong public condemnation, such as telecommunications and internet fraud, gambling, drugs, illegal fundraising, and financial fraud. It will also improve the normalized mechanism for combating organized crime, effectively deterring crime and protecting the people.Bank of Japan official: Japans employment and income situation has improved moderately.A Bank of Japan official stated that Japans financial conditions remain accommodative, supporting economic activity.

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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