Predictably quiet G-10 session with the US market closed for Thanksgiving, but EM currencies dominated price action
The Aussie dollar has held up remarkably well against broader USD strength and while the high betas, in general, came under stress the Aussie performed remarkably well holding it’s own versus EUR and JPY, Commodity prices and oil supply cut headlines are providing essential support for the commodity bloc
USDJPY continues to ratchet higher primarily driven by higher US bond yields and supportive US economic data. Apparently, the USDJPY continues to be the most favourable currency pair to express a US dollar strengthening bias; Price action suggests markets still under positioned dollar as any sell-offs are shallow and running into a wall of buyers. UST 10’s touched a high of 2.416 % spurred on by strong USD durable goods and solid consumer sentiment gauges.
The lack of intervention has traders probing higher as the supportive US economic data provided a significant tailwind for the stronger USD move.
Emerging Markets ( EM)
The Turkish Central Bank surprised the market and decided to hike the benchmark rate by 50bps to 8% for the first time since 2014. It also increased the OLR to 8.50% by 25bps, with the OBR left unchanged at 7.25%. The consensus forecast was no rate change across the board.Regardless the TRY lira fell aggressively as the rate hike did little to alter the markets worsening expectations. Nor modifies the markets prevailing view for a weaker TRY
USDINR traded to a high of 68.75 feeling the fallout from the demonetization policy that has global investors concerned that this move will weigh negatively on economic growth outlook
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Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.