USD/ZAR touches two year high on Turkey contagion

Turkey attempts to calm markets

USD/TRY retreated from record highs above 7.00 struck early in today’s trading as markets took notice of comments from Turkish authorities on Sunday that they have drafted a stability plan. Turkey’s central bank said it had lowered reserve requirement ratios for banks to free up liquidity and assured markets that it would take all necessary measures to maintain financial stability. Turkish Finance Minister Berat Albayrak also said the banking watchdog had also limited swap transactions in the currency. While the kneejerk reaction to the “plans” lifted vulnerable currencies off their lows, sentiment is still extremely fragile and could turn dramatically.

USD/TRY has dropped about 4.7% from its record peak at 7.1412 this morning to trade at 6.8015 but is still down almost 40% this month. The contagion effect did not spare other emerging currencies, with the South African rand falling as much as 8.9% versus the dollar in early trading touching its lowest level in more than two years and USD/SGD touched a 13-month high of 1.3766. USD/MXN is also pushing higher, gaining 2.2% on the day.

USD/TRY Hourly Chart

Source: Oanda fxTrade

Asian equity markets were also caught up in the currency mayhem with all regional indices in the red. Nikkei225 down 1.25%, Australia’s ASX dropped 0.42% and China’s A50 shares down 0.5%. Across the currency spectrum, the US dollar remains in demand followed by the JPY and CHF as the quest for safe haven assets remains dominant. USD/JPY has slid 0.54% TO 110.25 while US 10-year yield is holding steady at 2.86%.

Oil drifts lower despite tight supply fears

Anticipated tight supply conditions pushed oil prices higher as trading got under way though concerns about a possible near-term drop in demand capped gains. In the longer run, oil demand is seen rising to 1.5 million barrels per day in 2019, up from 1.4 million barrels per day this year, according to the monthly IEA market report released Friday. WTI is currently trading at 67.65 after touching 68.17 earlier.

WTI Hourly Chart

Source: Oanda fxTrade

It’s a slow data slate to start the week. The full data calendar can be found here:

OANDA Market Insights podcast (episode 27)

Source: Oanda Market Pulse

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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