Turkey was on the FX menu at today's New York bell, and it isn’t even Thanksgiving. Chef Donald Trump and his aides have concocted a smorgasbord of tariffs, sanctions and threats of more sanctions, fueling a broad demand for US dollars.
The US president upped the ante this morning even as the TRY threw in its cards, tweeting: “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”
The greenback opened in New York with gains against the major G10 currencies except the Japanese yen after a lively, somewhat choppy overnight session. This morning's US July CPI data were uneventful, but that’s because Trump’s tweet got all the attention. The US dollar extended its overnight slide and made new lows for the day.
EURUSD continued to be hammered. The fresh Turkey sanctions triggered another bout of Turkish lira selling. USDTRY spiked to 6.9260 from 5.9100 at the New York open. If European Union officials were worried about major EU banks’ exposure to Turkey at USDTRY 5.92, they would be terrified at USDTRY 6.9260.
The Canadian dollar employment report looked good but was rather ugly. Canada added 54,000 jobs, handily beating the 17,000 forecast while the unemployment rate fell to 5.8% (forecast 5.9%). Unfortunately, all the gains were part-time jobs. Canada lost 28,00 full-time workers. USDCAD reversed its initial drop and returned to its opening level.
Turkey took a bite of Wall Street. The major indices opened in negative territory led by a 0.66% drop in the Dow Jones Industrial Average. WTI oil prices climbed from $66.79/barrel at the open to $67.58/b. Prices were underpinned by a bullish report from the International Energy Administration warning of price disruptions if US oil sanctions on Iran are implemented.
EURUSD technicals are bearish after breaking major support in the 1.1500-05 area overnight and 1.1440 this morning, clearing the road for a drop to 1.1310.
Chart: EURUSD (daily)