Turkey’s lira to keep falling against USD
By Yann Quelenn
The USD surged more than 6% against the Turkish lira, after both the USA and Turkey suspended some of their visa services for each other. This came after an employee of the US embassy in Istanbul was arrested on charges of espionage.
We believe the USD will continue upwards from its current level of around 3.80 TRY, as Turkish-American relations deteriorate. Tensions are escalating over US support to Syrian Kurdish rebels, whom Turkey considers to be terrorists. Meanwhile, Turkey is edging closer to US rivals Russia and Iran. There might be short-term bouncebacks, but global tensions are on the rise and should weigh on the TRY.
Tumbling Aussie dollar
By Arnaud Masset
Although the Australian dollar held steady on Monday morning after slipping more than 1% against the US dollar last week, disappointing economic data versus positive US economic figures is encouraging investors to unwind long AUD position.
The Reserve Bank of Australia reported mixed news last week. Although economic growth is gradually picking up, the AUS’s strength will weigh on exports and on inflation. Moreover, September’s retail sales came in well under the median forecast, contracting 0.6% from August compared to an expected 0.3% gain. Last Thursday, AUD/USD broke its monthly range to the downside below 0.7787 USD (low from July 18th) and is currently trading at around 0.7760. Real action won’t start until tomorrow, because many American traders are off today for Columbus Day.