THERE has been speculation in the markets that the Turkish central bank (TCMB) will begin tightening monetary policy in the coming months thanks to strong fourth quarter GDP growth of 6 per cent and inflation of 9.6 per cent in March. Currency traders should be looking out for any hawkish signs from the TCMB for an indication that the Turkish lira could appreciate further.
It has already strengthened by more than 4 per cent against the US dollar since 25 March and is currently trading at TL1.4853 against the greenback. Rising Turkish yields have also been a key driver of US dollar-Turkish lira, so watch these as well for signs. Spread Co has a spread on US dollar-Turkish lira of TL1.4843-TL1.4863.
Sterling has been under pressure against the US dollar as a result of the UK’s fiscal deficits and uncertainty about the impending general election. Sterling-US dollar is trying to stay above the recently crossed 55-day moving average at $1.5359 and is now aiming for the seven-week highs that it hit on Monday. Will nervousness ahead of the election push sterling back below the moving average or is this a real break higher for the pound? We should know whether it was a break out or a fake out by the end of this week. Spreadex is offering a spread of $1.5361-$1.5364.
Analysts have been disappointed by the performance of the euro since the announcement of the details of the financial rescue plan for Greece. BNP Paribas strategists say that euro-US dollar is struggling to achieve even its conservative $1.3860 upside target. At this point they would recommend re-establishing short positions. IG Index is offering a spread of $1.3580-$1.3581.
The yen has stabilised following comments from the governor of the Bank of Japan that the central bank is likely to be patient and await the effects of easing measures already taken before going further. But the pullback in dollar-yen could provide a renewed buying opportunity. Capital Spreads offers ¥93.18-¥93.20.