Large Additional Slide of the Turkish Lira

June 7, 2023

The dollar jumped 7.4% overnight against the Turkish lira. At the intra-day low of 23.1762 per USD, Turkey’s currency was 13.8% weaker than its close on May 26 just before the reelection of the autocratic President Erdogan.

Against other currencies overnight, the dollar lost ground, dropping 0.7% against Australia’s currency, 0.5% versus sterling, 0.4% relative to the Mexican peso, 0.3% vis-a-vis the Japanese yen, 0.2% against the euro, Swiss franc and New Zealand dollar, and 0.1% relative to the Chinese yuan and Canadian dollar.

Overnight net movements in 10-year sovereign debt yields and the price of oil were negligible, but bitcoin tokens and gold fell 1.5% and 0.2%.

The Japanese Nikkei dropped 1.8% after hitting a 33-year high on Tuesday. The German DAX, Paris Cac and U.S. stock futures show scant change.

China’s trade surplus narrowed 27% on month to $65.81 billion in May due to an unexpected 7.5% slide in exports.

A 0.2% rise of Australian GDP last quarter was the smallest gain in six straight quarters of positive growth. GDP was 2.3% higher than in the first quarter of 2022, down from year-on-year growth of 3.8% in 1Q 2022.

Revised GDP forecasts made by the OECD project growth this year of 2.7% in the world, 5.4% in China, 1.6% in the United States, and 0.9% in Euroland. OECD officials see the United States swapping places next year with growth of 0.9% in the U.S. and 1.5% in Euroland. If the OECD’s U.S. forecast of less than 1.0% growth in 2024 proves correct, Donald Trump’s chances for winning back the White House would be greatly enhanced.

German industrial production increased 0.3% last month, only half what analysts were projecting after a 2.1% plunge in April.

The French current account deficit of just EUR 144 million in April was down from EUR 2.44 billion in April 2022, reflecting a big drop in energy imports.

Italian retail sales just 0.2% in April following no change in March and a 0.1% dip in February. Sales growth from a year earlier of 3.2% was down from 6.2% recorded in January.

Norwegian industrial production rose 0.8% in April but was 4.7% below its year-earlier level.

The British Halifax house price index experienced its first 12-month decline (-1.0%) in 125 months during May.

A 1.4% drop in U.S. mortgage applications last week was the fourth consecutive decline. The cumulative decline has been almost 15% over that span.

Estonian CPI inflation of 11.3% in May was down from 13.5% in April and 24.8% last August.

Japan’s indices of leading and coincident economic indicators in April rose to 5- and 7-month highs but remained historically soft. The trend designation of the coincident index remained “weakening” for a fifth straight time.

Bank of Canada officials will announced their latest interest rate decision later this morning.

Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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