The boost to the Turkish Lira from yesterday's emergency 3% hike in the late liquidity window rate by the Turkish Central Bank did not even last one full day, and on Thursday the violent collapse in the Turkish currency resumed.
President Erdogan vowed that Turkey would comply with global principles guiding monetary policy after the June 24 election, however in the meantime he strongly urged his citizens not to exchange Turkish Lira into foreign currency.
While payrolls will come and go, the big story remains the accelerating rout in Emerging Markets, where a bevy of currencies, including the TRY, ZAR, INR, IDR and especially the Argentina Peso, have gotten crushed prompting questions if another 1997-style EM crisis is on the horizon.
Markets appear to be running out of reasons to stay optimistic this week. The White House reshuffle and concerns about protectionist US policy agenda is at the heart of that however yesterday’s soft retail sales report also seemed to put the brakes on the ‘Goldilocks’ data scenario.
The dollar rose to its highest level in a week against its G10 peers on Wednesday, rising for the 4th day against the yen and most pairs as investor focus shifted to the minutes of the Federal Reserve’s last policy meeting.
Global stocks, bond yields and commodities all jumped higher on Thursday while the dollar plunge continued, as investors suddenly seemed to forget the inflation fears blamed for a brutal market sell-off in recent weeks.