Lira Slumps As Turkey Votes to Press on With Constitutional Reform Debate

Turkish Lira witnessed vicious fall yesterday, hitting a new low of 3.74 versus the USD. USD/TRY is extending the spike on Tuesday, up 1.76 percent on the day, hitting new record highs at 3.7862.

Turkey’s parliament voted on Tuesday to press on with debate about a constitutional reform package that would expand the powers of President Tayyip Erdogan. Opponents to the reform fear it will fuel authoritarianism. If passed the Erdogan will be able to appoint and dismiss government ministers, take back the leadership of the ruling party, and govern until 2029.

All relevant fundamentals in Turkey point towards a steady depreciation trend for the Lira. Central Bank of Turkey’s (CBT) refusal to hike rates even as inflation re-accelerates remains one of the primary drivers of the trend, as this has kick-started the familiar inflation-FX spiral once again.

“We may expect to see sharper moves on days when the USD is generally strengthening, but this is not really about different day to day developments, and will probably continue until CBT’s hand is forced in the shape of a rate hike. We expect another 50bps hike this month, but it would have to be sharper if CBT really wants to put an end to the trend.” said Commerzbank in a report.

The material has been provided by InstaForex Company – www.instaforex.com

Fxwirepro: Usd/cad Outlook Weaker on renewed Downside Pressure

  • The USD/CAD pair declined on Tuesday as oil prices rose and stronger-than-expected domestic housing starts suggested the country’s long housing boom may not yet be over.
     
  • Housing starts rose to a seasonally adjusted annual rate of 207,041 units in December from an upwardly revised 187,273 units in November.
     
  • Oil prices steadied on Tuesday after a sharp sell-off as a fall in the dollar triggered a bout of short-covering.
     
  • Short raise around 1.3290 should be viewed as selling opportunities, as the Canadian dollar is stronger against the US dollar in intraday trading.
     
  • The immediate support can be seen at 1.3155, break below this level will expose the pair to next support level at 1.3070.
     
  • Major resistance can be seen at 1.3295, break above this level will expose the pair towards 1.3355 levels.

    Resistance Levels

    R1: 1.3225 (50% Retracement level)

    R2: 1.3295 (61.8% Retracement level)

    R3: 1.3355 (Dec 5th high)

    Support Levels

    S1: 1.3155 (38.2% Retracement level)    

    S2: 1.3070 (23.6% Retracement level)

    S3: 1.3000 (Psychological levels)

The material has been provided by InstaForex Company – www.instaforex.com

French Industrial Production sees Sharp Rebound in Nov After Two Months of Contraction

French industrial production rebounds sharply in the month of November, statistics agency Insee said Tuesday. Higher petroleum and transport equipment output supported a faster than expected pace of rise in France’s industrial production in November.

Insee data showed Tuesday that France’s industrial production rose 2.2 percent month-over-month, in contrast to October’s 0.1 percent fall. Data beat economists’ forecasts for a 0.6 percent rise for November. Output grew the most since August, when output grew 2.6 percent.

Manufacturing output advanced 2.3 percent, reversing a 0.6 percent fall in October. This was also the fastest growth in three months and exceeded the expected growth of 0.7 percent. Meanwhile, construction contracted 0.3 percent after rising 2 percent in the prior month.

The surge in industrial production suggests economic growth in France may have accelerated in the final quarter of the year. The strength in France also stokes expectations for upbeat industrial production figures for the whole of the Eurozone (due Thursday).

The material has been provided by InstaForex Company – www.instaforex.com