Global Themes


Turkish regulators take action against the Lira

Regulators move to block traders

In an interesting move, Turkish regulators have moved to quell the ability for traders to bet the against the troubled currency by limiting short capabilities. In addition to this, they have eased rules for restructuring flailing loans which now exceed $20 billion.

These actions appear to have compounded the rebound of the Lira over the last couple of days, however analysts argue that they merely treat the symptoms of the issue and not the problem itself. Economics text books espouse a simple strategy for treating weak currencies - raising interest rates, something that President Erdogan is oddly opposed to.

While markets have stabilised in the last few days, it is wise to take stock of previous scenarios to this effect, such as the sovereign debt crisis in Greece in 2009/ 2010. Whilst symptoms can abate, it does not mean that the underlying issues are fixed. With several EU members having significant exposure to Turkey, and Erdogan's refusal to heed the advice of the global community, there remains substantial risk for a push to the downside.

US retails sales above expectations

The land of consumerism bumps up spending

The consumer mecca that is the United States delivered retail sale figures well above expectations this morning, coming in at 0.5% versus 0.1% expected. Despite these positive figures the NZD/USD remained largely unchanged overnight opening at 0.6570 having closed at 0.6571 yesterday. This lack lustre performance by the NZD/USD could be attributed to the brief abatement in risk-off sentiment as Turkey remedies their currencies symptoms.

If risk sentiment holds or improves, there may be scope for NZD/USD to return to 0.6700 levels. However, given current events, coupled with the steaming US economy, there is still room for further downside as the year progresses. Market orders remain a good strategy to take advantage of rebounds in the market. It is however important to have a fall back rate if targets aren't achieved.

AU job numbers today

AU news on the horizon

Thursday: AU employment figures

Friday: RBA Governor Lowe speaks

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Published five days a week, this newsletter provides day-to-day trends and activities affecting the market in easy-to-understand snapshots