Turkish Lira Under Renewed Pressure

April 21, 2021

A cabinet reshuffle in Turkey has depressed the lira 0.5% against the dollar to a 10-day low.

Overall, the U.S. currency shows limited and mixed overnight movement with upticks of 0.3% versus the Swiss franc, 0.2% relative to the euro and 0.1% vis-a-vis sterling, no net change against the Japanese yen or Chinese yuan, but downticks of 0.2% versus the kiwi and Mexican peso and of 0.1% relative to the Canadian and Australian dollars.

Markets are closed today in India for Ram Navami and Brazil for Tiradentes’ Day.

Share prices fell significantly overnight is several markets around the Pacific Rim, such as Japan (-2.0%), Hong Kong (-1.8%), South Korea (-1.5%), Singapore (-1.2%), Indonesia (-0.8%), Taiwan (-0.7%) and New Zealand (-0.5%). However, European equities show moderate gains, and U.S. stock futures are little changed.

Gold firmed 0.3% and is hovering around a seven-week high. In contrast, WTI oil fell 1.5% and is 9.2% below last month’s peak.

The ten-year U.S. Treasury and British gilt yields rose a basis point, whereas their Japanese counterpart dipped a basis point today.

A number of countries released price figures.

  • British CPI inflation accelerated less than forecast to a 2-month high of 0.7% in March. Core inflation of 1.1% also climbed to a 2-month high.
  • British producer output price inflation jumped a percentage point to a 22-month high of 1.9%, but the underlying PPI-O measure matched February’s 1.7% 12-month rate of increase. Producer input price inflation jumped to 5.9% in March from 3.3% in February and minus 1.0% last November.
  • New Zealand consumer prices advanced 0.8% on quarter in 1Q 2021. Year-on-year CPI inflation rose 0.1 percentage point to a 3-quarter high of 1.5% but was down from a pre-pandemic 2.5% in the first quarter of 2020.
  • South African CPI inflation increased from February’s 8-month low of 2.9% to a 2-month high of 3.2% in March.
  • Polish producer price inflation nearly doubled last month to a 47-month high of 3.9%.
  • Similarly, South Korean PPI inflation of 3.9% last month constituted a 4-year high.

Among other data release highlights today, Australian retail sales rebounded 1.4% last month from February’s 0.8% drop. Sales last quarter merely stagnated relative to their level in the final quarter of 2020.

Business confidence in Indonesia swung from -3.90 in 4Q 2020 to a one-year high of +7.68 last quarter.

Italian construction output rose 1.4% on month and 3.5% in year in February. Compared to January-February 2020, construction was 1.5% higher in the first two months of 2021.

The Bank of Canada is reviewing monetary policy today and not expected to change its key interest rate. This month’s meeting coincides with the quarterly update of macroeconomic forecasts and will be followed by a press conference. Of even greater interest, the European Central Bank Governing Council has a scheduled policy meeting tomorrow.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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