Asian and US equities dropped yesterday after US President Trump announced his discomfort about the progress in the US-China trade talks, and suggested that the planned US-North Korea Summit may not happen on 12th June.
In FX, the general risk-off sentiment prompted JPY to rise against its major peers, whilst AUD and NZD came under pressure.
In EM, TRY sold-off aggressively and USDTRY reached a new historical high of 4.8200 overnight.
Barclays Research believes that “increased macro vulnerabilities, heightened fragility of corporate balance sheets in the face of TRY weakness, and eroding household confidence in the lira will eventually force the CBT to defend the currency”.
GBP gained initially yesterday on BoE Governor Carney’s hawkish speech to the Treasury Committee suggesting that that we should expect a gentle rise in interest rates starting this year. However, the rally was short-lived and GBPUSD weakened after Carney stated that UK households are £900 worse off today compared to pre-Brexit vote.
GBPUSD has continued to fall overnight and broke below 1.3390 this morning, ahead of the release of UK inflation data at 9.30.
Italian headlines continue to drive short-term noises in EURUSD and weigh on EUR crosses. Italian President Mattarella is expected to make a decision on the role of the new Prime Minister as early as today which will be closely watched.