Lira spirals lower after CBRT cut

It’s been a slightly negative day in the markets, with Europe looking to close a little lower after largely grinding higher so far this week.

It hasn’t been the most eventful couple of weeks for the markets, with investors continuing to fret about the prospect of higher inflation and earlier rate hikes after recently being buoyed by a strong third-quarter earnings season.

We’re continuing to see encouraging signs from the US, be that from Tuesday’s retail sales report, retailer earnings or today’s manufacturing and jobless figures. But stock markets there are even starting to struggle as we ultimately await further clues on how central banks are going to tackle the inflation problem.

I can’t imagine many are going to follow the lead of the CBRT any time soon.

Lira spirals lower again after CBRT cut

The Turkish central bank took the unusual step of cutting rates in line with market expectations today and even suggested it will assess ending rate cuts in December. I’m not sure if that counts as hawkish by its standards or if we’ve now just come to expect the ridiculous.

It did suggest it may ease again in December though, at which point there was no saving the lira which plunged to a new record low against the dollar, with the USD/TRY pair breaching 11, only three days after hitting 10 for the first time ever.

There’s clearly no indication that the CBRT is being deterred by anything that’s happening in the markets. The central bank is a shambles and the website crashing and delaying the announcement could not have been more symbolic of what’s happening behind the scenes.

Bitcoin correction is not a big deal

Bitcoin is continuing to struggle and once more we’re seeing it test the late October lows around USD 58,000. A significant break below here could see it accelerate to the downside, at which point focus may shift back towards the USD 50,000 region. While this would represent a large correction from the highs, it would still be relatively minor considering how far it’s come in recent months.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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