USD/TRY

No significant news today on Iraq or Ukraine. Thus still worrisome situations
Turkish stock market down again this morning by .5% while yesterday another total .5%! Zar quoting now 10,78 and going up. Tyr resumed going up so far 2,1350, while yesterday very low volatility for the pair i.e. 60 bips wide ans stable at 2.1300. US data expected very good as yesterday thus tyr and zar should be going up further and EUR/USD down. US Index should be going up again today after improvement yesterday by 0,3% helping the pairs. Where is Scotty these days? I do not understand the logic of Kimen…

US data wonderful and thus EUR/USD at 1,3600 Then Zar at 10,84 and Tyr at 2,1400. I believe that the devaluation will continue tomorrow and Monday after the choc of a US Unemployment falling to 6,1%. Interest rates will have to climb in the US faster than anticipated pushing dollar value higher

The Zar and the tyr have done a two way sreeet they are back at 10,76 and 2, 1320 Honestly, I am lost by this behavior. If somebody could explain this, I would appreciate! I had moving stop so I sold Zar at nice profit, but I would like to understand the fall back so fast…I finally decided now to buy back the zar at 10,76 because it appears stabilized and hopefully ready to go back up....

I've been lost on both pairs also the last2 weeks, had nice runs today in both on the long side for the first in a long time. Surprisingly with all the turmoil in the world and both countires specifficaly volatility is declining.

Maybe this has something to do with it : http://www.zerohedge.com/news/2014-0...ollar-alliance. Also longer terms long on USDTRY have a very high maintance rate atm

@joyfultrader

Going into US event, ZAR had broken significant resistance compared to TRY.
That is why a long UZAR was taken, but hedged with short USDTRY (to keep USD exposure zero).

As expected the strategy worked as ZAR moved 0.7% while TRY only 0.35%
It did go near target 10.85 outlined yesterday.

Regarding retracement, check AUD, NZD too. Massive buying at 50fib levels.
But, looks like all these should be selling opportunities.

Kimen, I still do not understand your strategy because, once more yesterday, the symmetry between ZAR and Tyr was clear except in amplitude, as you indicated it. Thus shorting one and putting the other long could not generate any protection or hedging
As far as other currencies coming back, the movements on AUD were somewhat unclear and flat, and, on NZD, limited
Today the market seems to take the data on US with a grain of salt, say the least, thus with US closed for independence, we may have to wait Monday to receive some indication where the currencies are going. We know now that, reasonably quickly yesterday, the market remained sceptic about the US data, (the reduction of 400.000 full employment against the 800.000 part time plus) thus the up movements were practically canceled in three hours and the volume of Carry trade explain the rest Yesterday the turkish stock market went back up by 1.5% within hours after the US data annoucement!

@joyfultrader

Its just a USD hedge.
For example if US data was bad, then just a USDZAR long would have lost.
But if USD data was good, I gained more (0.75%) on long USDZAR than lost (0.35%) on short USDTRY.

So this way whatever is US data is a win scenario.

I don't think I get in, but if I did, I would probably bet for longs:

https://charts.mql5.com/5/140/usdtry...l-services.png

This week end there has been developments in Ukraine which will be significant for the future.
The rebels after another week of fighting have abandoned Sloviansk! OSCE has discovered an humanitarian crisis of great dimension Over 100.000 refugees only for the ones gone to Russia! Many casualties due to the fighting techniques used buy Ukrainian fearing missiles given by Russia to rebels i.e; Bombing through ground techniques! Thus the rebels have retreated due to their growing convictions that Russia will let them down (and they declared it to the Russian press)! Intelligence seems to indicate that Poutine would be considering helping the rebels cities on an humanitarian basis to regain some prestige (and allow refugees to return to Ukraine) and concurrently to buy some politicians against Porochenko to destabilize Ukraine and create political turmoil there! Thus situation not easy to asses and Donetsk will be tougher to regain than Sloviansk.

At this stage, EU seems to believe that this will be more and more a possible case. The data shows that, only for Crimea, the yearly bill for Russia will amount to over 2 billion US Dollars (mentioned in previous mails). If Russia would invade the East southern Ukraine, there is a fair valuation over 15/20 billion USD per year to support pensions payments and health care plus the money related to the problems of putting back the economy on the run (which has been at quasi stand still for months now). The central bank of Russia has clearly stated that it will push for a rubble devaluation in order to reduce the state budget deficit which is growing every months! Finally Poutine may believe that further sanctions would create to many problems to Russia! Furthermore the diplomatic isolation of Russia affects their prestige. But the pressures inside the oligarchy and from the Russian population remain high for further actions of Russia In Ukraine…! Finally Ukraine position now is “complete surrender of pro-Russian militia before peace talks resume”. Not an easy one to help the crisis!

I will be absent today and reply to messages tomorrow

Kimen, my point is that if you superpose the charts on Five minutes USD/ZAR and USD/TRY, you get a surprising correlation of movements up and down with limited difference in volume but always in same direction and it last now for over a month with an exception last week for two days. It worked again yesterday and today…

Official data on Turkey:” Turkish annual inflation rate decelerated for the first time in seven months to 9.16 percent in June of 2014 from 9.66 percent in the previous month as food prices slowed. Turkey’s trade gap decreased for the fifth straight month by 28.7 percent year-on-year to USD 7.1 billion in May of 2014, driven by a fall in imports.
Yesterday the Turkish stock market went up by 2,5% completely against the trend of Europe and US. Today already 1% up against trend. Thus, in this context, it is difficult to experience a devaluation of the lira… Plus the us index went down slightly. Thus the investors are coming back on this market despite eth mediocre performances of the economy. Turkish jobless rate decreased to 9.7 percent in March of 2014 from 10.2 percent in February. It is the lowest rate in five months. The Turkish economy advanced a seasonally adjusted 1.7 percent quarter-on-quarter in the first three months of 2014, up from a revised 0.9 percent expansion in the previous quarter. The GDP grew at its fastest pace in a year, boosted by agricultural and mining production. Turkish trade gap shrank to USD 7.2 billion in April of 2014 from USD 10.4 billion a year earlier, as exports rose 7.9 percent and imports fell 9.5 percent.

With the high inflation rate and trade deficit, it appears difficult to believe that the lira could continue to reevaluate… The trading economic site is continuing to forecast 2,25 before September???

Official data on SA: “South African economy shrank a seasonally adjusted annualized 0.6 percent in the first quarter of 2014. It is the first contraction since the 2009 recession, as the strike in the platinum sector dragged mining and manufacturing output down. In the first quarter of 2014, South African economy advanced at a slower 1.6 percent over a year earlier, hurt by a fall in mining output. The platinum strike is now in its fifth month and is the longest in the history of South Africa's mines. South African trade gap increased 9.6 percent to ZAR 13 billion in April from a revised ZAR 11.8 billion in the previous month, as prolonged strikes in the mining sector keep dragging exports down. South African annual inflation rate quickened to 6.6 percent in May of 2014 from 6.1 percent in the previous month. It is the highest rate since July of 2009, as food prices accelerated for the fifth consecutive month. South African trade gap decreased to ZAR 0.65 billion in May of 2014 from a revised ZAR 12.4 billion in the previous month. It is the lowest shortfall in three months, due to a sharp fall in imports.” Unemployment at 25% and participation rate at 56%!

If these data plus poor projections for the next months plus new mining strike in metals, does not justify devaluation against a reevaluating dollar, then I lost my hairs! So far Zar is playing yoyo between 10,70 and 10,84 and lira between 2,1250 and 2,1350!


The forecasts of Socgen shown by Jeffmichaels indicate that Zar will reevaluate against Tyr, if projection is validated but it does not say anything regarding position of these two currencies against dollar…

Looking at PA the last 2 or so weeks, I feel we may all be underestimating the power and will of central banks to use their reserves to defend their currency, seeing so much downside pressure on both pairs.

To Jeffmichaels: Your hypothesis is plausible for Tyr but I do not remember de data collected by Scotty regarding the volume of currency reserves already blown out by Turkish central bank at the last devaluation of the lira! Today the Turkish stock market has been flat; already something more positive while European markets were clearly down… At least it stooped to go up
For Zar, I have difficulties to believe that Zar with all its problem could use limited reserves available to pilot the market! They do it at night with limited volume (few million ZAR) to gain usually 200 bips, particularly on Friday night for exchange for visitors! Probably, it is still carry trade and bond purchases by large institutional investors! Time will tell… But Zar has been more negative today than TYR.

Im thinking this still plays a big role too. And also the thought for visitors, but I had this more for TRY as it attracts a lot of people from EU over the weekend.

I had posted on TRY forex reserves earlier and they seem to have enough left. Or arent these the numbers I should have been looking at?

Following my investment bank and on the basis of specific flow observed by them, the market does not seems to believe anymore that the rate hike in the US could occur before next year, thus the funds have resumed to invest in bonds and carry trade in Zar and Tyr to obtain better yields! This explain the revaluation of both currencies in their view and I tend to believe them and you. Plus the weak dollar (US index at 80,13 this morning!). This could change fairly rapidly but nobody knows when? The bank also believes that the hedge funds will proceed cautiously because they know that these currencies could devalue quickly thus they should not play in to reevaluate them to much…
EU is clearly very concerned by the preparation of an invasion of Gaza by Israeli. Massive military equipment is brought to the Gaza border and 40.000 reservists have been called on duty The question appears more now when will this happen than if! This will create an impact on oil prices as an addition to the other mid-east crisis.
Ukraine army is proceeding to the conquest of the south eastern, but the concerns is growing about the two last major cities, Donetsk and Kramatov because the rebels are decided to fight using the civilians as armor to protect them. Thus humanitarian disaster could be possible and also a reaction of Poutine. EU will be required to provide humanitarian help for the cities re-conquered.

Well still in from yesterday & up nicely.

What would a ground operation mean for TRY & ZAR ? appreciation or devaluation ?

The ground operations do not mean anything for Tyr and Zar. Operations begun Saturday and have already allow to regain half the territory from rebels. May be for Tyr a possibility to breathe when the operations will end. But the major risk comes from the possibility of heavy civilian casualties forcing Poutine to intervene and that would create devaluation for Tyr at least. For Zar the economic data are sufficient for devaluation as soon as inflow of dollars will end. It was again typical this afternoon when Zar went down and Tyr also during American session . I believe also that we may have to wait next week to really see some push on the dollar coming from Yellen testimony to congress. I doubt today beige book will bring anything

By the way, I do not understand your other phrase, since tyr and zar are really down now as well as US index

The ground operations do not mean anything for Tyr and Zar. Operations begun Saturday and have already allow to regain half the territory from rebels. May be for Tyr a possibility to breathe when the operations will end. But the major risk comes from the possibility of heavy civilian casualties forcing Poutine to intervene and that would create devaluation for Tyr at least. For Zar the economic data are sufficient for devaluation as soon as inflow of dollars will end. It was again typical this afternoon when Zar went down and Tyr also during American session . I believe also that we may have to wait next week to really see some push on the dollar coming from Yellen testimony to congress. I doubt today beige book will bring anything

By the way, I do not understand your other phrase, since tyr and zar are really down now as well as US index

Ok clear thanks for outlining that groundaction issue.

I meant that my shorts were up in profit nicely

In Ukraine the army is preparing the remaining operations and the most risky They are blocking all entries to the main two cities and are calling for a surrender of the rebels but will attack if they do not proceed…
In Israel, EU believes that the full blown war in Gaza is quasi inevitable with the over 80 rockets fired yesterday by the Hamas against the main cities of Israel while Israel begun bombarding specific Hamas target in Gaza. Casualties are already in the forties in Gaza plus many injured. A family of six was killed while they received a phone from Israel a few minutes before the bombing to evacuate their building controlled by Hamas leaders and they refused to evacuate….! The story is told by the gran mother (to Egyptian journalists) who was the only one to evacuate the building!
This morning the US index is still down while the Tyr is up slightly and Zar too… The beige book was not easy to analyze inasmuch as the tapering will be closed one month sooner but interest rates are not supposed to rise before mid-next year! The problem is that the beige book does not yet integrate the last employment figures and the last inflation figures… Then few people believe that this objective is sustainable unless the economy would slow again …! So let’s wait next week Janet Yellen testimony. Anyway the currencies went in volatility up and down before deciding to go down! So far so good for Jeffmichaels playing the downside. For me, it was unclear what to do.
The European stock markets are really down and the Turkish one stabilized so far! If it was beginning to go down, it would help the devaluation of the Lyra