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10 Sep 2013
Flash: Dollar Mixed Amid “Risk On Impulses”- BBH Global Currency Strategy Team
FXstreet.com (Athens)- Marc Chandler Global Head of Currency Strategist of BBH, notes that the US dollar is narrowly mixed in response to the potential compromise on Syria and firmer Chinese data.
Key Quotes
“The US dollar is narrowly mixed in response to the potential compromise on Syria and firmer Chinese data. The combination of the election outcome with much higher-than-expected inflation is altering the expected policy mix in Norway, and lifting the krone 0.8% against the dollar. It is the strongest of the major currencies.”
“Norway's surprise came from firmer inflation figures. Headline CPI slipped 0.1%, not the 0.4% the consensus expected, and this saw an unexpected increase in the year-over-year rate to 3.2% from 3.0%. The underlying rate also rose to 2.5% from 1.8%. This not only means that the central bank is firmly on hold at next week's meeting, but also injects risk that the rate path is increased.”
“Turkey’s Q2 GDP rose to 4.4% y/y, far more than the 3.5% expected. The economy is starting to pick up, but inflation never really fell as much as one would expect during the recent slowdown. As such, the central bank will likely face some tough decisions ahead regarding growth, inflation, and the exchange rate.”
“Indeed, the bank has lowered the average cost of funds over the past week as selling pressures on the lira eased as for now, the lira is simply benefiting from the generalized improvement in EM sentiment. For USD/TRY, support seen near 2.00 and then 1.95, resistance seen near 2.05 and then the 2.0750-2.0850 area (highs from last week).”
Key Quotes
“The US dollar is narrowly mixed in response to the potential compromise on Syria and firmer Chinese data. The combination of the election outcome with much higher-than-expected inflation is altering the expected policy mix in Norway, and lifting the krone 0.8% against the dollar. It is the strongest of the major currencies.”
“Norway's surprise came from firmer inflation figures. Headline CPI slipped 0.1%, not the 0.4% the consensus expected, and this saw an unexpected increase in the year-over-year rate to 3.2% from 3.0%. The underlying rate also rose to 2.5% from 1.8%. This not only means that the central bank is firmly on hold at next week's meeting, but also injects risk that the rate path is increased.”
“Turkey’s Q2 GDP rose to 4.4% y/y, far more than the 3.5% expected. The economy is starting to pick up, but inflation never really fell as much as one would expect during the recent slowdown. As such, the central bank will likely face some tough decisions ahead regarding growth, inflation, and the exchange rate.”
“Indeed, the bank has lowered the average cost of funds over the past week as selling pressures on the lira eased as for now, the lira is simply benefiting from the generalized improvement in EM sentiment. For USD/TRY, support seen near 2.00 and then 1.95, resistance seen near 2.05 and then the 2.0750-2.0850 area (highs from last week).”