US dollar drifting in holiday-thinned trade
Currency markets are in holiday mode and will likely remain so until the middle of next week. The dollar index barely changed from Friday at 96.11, marking three days of sideways trading. If anything, the US dollar looks vulnerable to positive headlines still on the virus front this week with support between 95.80 and 95.85 the important level to monitor. Liquidity is further reduced in Asia due to several regional centre holidays.
Major currencies continue to tread water with EUR/USD at 1.1320, GBP/USD at 1.3410, USD/JPY at 114.40, AUD/USD at 0.7235, NZD/USD at 0.6820 and USD/CAD at 1.2810. None of that has been much different since last Thursday. The return of US markets this afternoon and the gnomes of Wall Street should see volatility pick up slightly this evening.
Asian currencies continue range trading as the Asian interbank market looks to have closed shop for the year now. A stronger yuan continues to backstop Asian FX from negative sentiment shifts.
USD/TRY fell by nearly 6.0% on Friday as intervention and the central government’s effective lira value guarantee on deposits for retail savers continues to play out. USD/TRY has risen by 3.50% today though and USD/TRY looks to be forming a base ahead of 10.0000 now. The authorities in Turkey may find engineering further lira rallies harder going from here, and I will be watching their foreign reserve data going forward for more signals of when to re-enter the short Erdogan trade.
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Jeffrey Halley
He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays.
A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others.
He was born in New Zealand and holds an MBA from the Cass Business School.
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