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On September 9th, BlackRock strategists stated in a research report that the impact of Japans interest rate reset has transcended its borders as capital competition intensifies. The strategists believe a feedback loop exists in the bond market: "Rising US interest rates could weaken the yen and pressure the Bank of Japan to act more quickly; conversely, rising Japanese interest rates could attract more capital repatriation, reducing demand for US Treasuries and thus pushing up US borrowing costs." They pointed out that decades of ultra-low domestic yields in Japan have made the country a major capital exporter, currently holding approximately $1.1 trillion in US Treasuries. If Japanese investors were to repatriate 5% of their funds, it would amount to $55 billion, roughly a quarter of the total increase in US Treasuries held by foreign investors last year.September 9th - South Korea has reportedly dispatched a team to assess the situation in the Strait of Hormuz, indicating that the country is further considering the possibility of deploying troops to the region amid increasing US pressure for its assistance in military action against Iran. South Koreas Ministry of National Defense stated in a statement Tuesday evening, "The purpose of dispatching this team is to assess the local political and security situation." The Ministry also emphasized, "This assessment itself does not mean that South Korea has presupposed any military deployment." The South Korean presidential office stated that whether or not to conduct military deployment is still under discussion and no decision has been made. According to Yonhap News Agency, the assessment team departed for the UAE over the weekend and will report its findings to the National Security Council upon its return. The Ministry of National Defense declined to disclose the teams current location, citing operational security concerns.On September 9th, at Pasinis media open day on September 7th, Pasini CEO Xu Jincheng responded to rumors about whether Samsung Electronics was a new shareholder. He stated that the company did indeed add a trillion-dollar global consumer electronics semiconductor giant as a shareholder in August, but did not disclose the specific name, only stating that there are not many such companies internationally. Regarding cooperation opportunities with the mobile phone supply chain, Xu Jincheng revealed that Pasini has already begun collaborating with Foxconn on production line data collection, with the demand from mobile phone production lines being even greater. He pointed out that while the automation rate in mobile phone manufacturing is already relatively high, final inspection and packaging processes still rely heavily on manual labor. With the improvement of humanoid robots and intelligent technologies, over 90% of processes in mobile phone and consumer electronics production lines can be automated.According to Yonhap News Agency, South Korea and the United Nations Development Programme have signed a cooperation agreement on landmine clearance.At the close of the morning session, domestic futures contracts showed mixed results. SC crude oil rose nearly 5%, methanol rose over 4%, propylene rose over 3%, benzene rose nearly 3%, and fuel oil, paraxylene, styrene (EB), and low-sulfur fuel oil (LU) rose over 2%. On the downside, palladium and ferrosilicon fell over 2%, palm oil, soybean oil, and red dates fell over 1%, and urea and Shanghai gold fell nearly 1%.

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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