FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%
EUR/USD
1.1720
BTC/USD
42 648.00
GBP/USD
1.3685
USD/JPY
110.7470
USD/CHF
0.9235
USD/CAD
1.2661
EUR/JPY
129.7966

Turkish Lira plunge felt in Japan


22 March 2021

Turkey has returned to financial market headlines following President Erdogan’s decision to fire the country’s hawkish central bank head on Saturday. The Turkish Lira tumbled 14% against the dollar as trading kicked off in Asia to become one of the worst performing emerging market currencies against the greenback this year. The reverberations were felt in Asian markets, particularly in Japan where the Nikkei 225 fell 2%. While there should not be a strong link between the Turkish Lira and Japanese equity markets, it is believed that retail traders in Japan hold significant leveraged long positions in the Lira as a carry trade. Hence, they have to cover these positions by selling equities in local markets.  

Elsewhere, Asian stocks traded mixed with China’s Shanghai Composite and Shenzhen Component slightly up, while Hong Kong’s Hang Seng and South Korea’s Kospi have fallen into negative territory. This indicates the Turkish Lira slump will only have a limited impact on other high yielding emerging markets with no risk of wider contagion.  

US equity futures are struggling for direction with the S&P 500 spending most of the Asian session between red and green. However, the Nasdaq 100 has gained following a six-basis point fall in US 10-year Treasury yields. Global investors will again be testing the appetite for US debt auctions following a rally of more than 60% in US 10-year yields over just seven weeks. A further spike in yields will bring more volatility and continued rotation into value stocks from growth stocks.

Long term interest rates may have risen for good reason as investors anticipate a strong US economic recovery ahead that could last for several years and brings with it inflation. However, this could also be the biggest threat for risk assets that have been benefiting from an extremely low interest rate environment since the beginning of the Covid-19 pandemic. Despite the recent surge in long term interest rates, they are still considered low when compared to historic averages and that’s why some high asset prices may still be justified at current levels with the Nasdaq 100 having fallen 7% from February’s peak. However, the higher the long-term interest rates go, the more difficult it becomes to justify these valuations.

Companies with the ability to pass on higher prices to customers are likely to be the ones that benefit most and should be overweighted in portfolios. These could be in the industrial, material, financials and commodity sectors.

#source

Related

Further recovery in XAU/USD appears elusive but Powell holds the key
Further recovery in XAU/USD appears elusive but Powell holds the key

Gold price rebounds from fresh six-week lows but upside appears limited. Fed Chair Jerome Powell’s speech in focus, FXStreet’s Dhwani Mehta reports...

24 Sep 2021

Stocks rise after Fed walks fine line on tapering
Stocks rise after Fed walks fine line on tapering

European markets trading higher after the Fed delivered another lesson in how to gently massage markets into accepting that tightening is on its way. The FTSE 100 has...

23 Sep 2021

Hawkish Fed brings out the bulls as dollar and stocks rise
Hawkish Fed brings out the bulls as dollar and stocks rise

The Federal Reserve took its biggest step yet towards scaling back its pandemic stimulus on Wednesday following the conclusion of its two-day policy meeting...

23 Sep 2021

Trading the BoE and FOMC meetings
Trading the BoE and FOMC meetings

The FOMC and the BoE meeting are firmly in our sights now, and positions and exposures will need to be managed accordingly. Certainly, the FOMC meeting could...

22 Sep 2021

Stocks bounce back after Evergrande panic
Stocks bounce back after Evergrande panic

As investors increasingly liken the Evergrande crisis with the collapse of the Lehman Brothers in 2008, they remain in the dark about the Chinese government's intentions...

21 Sep 2021

Oil Was Put on Hold
Oil Was Put on Hold

The oil price is falling after rallying before. Early in another September week, Brent is trading at $74.50 and has a lot of room to correct. The strong greenback...

20 Sep 2021


Forex Forecasts

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.