Euro Softens Amid Turkish Lira's Fall, USD Steady After GDP

Market Reviews

Euro falls, as Turkish lira crisis re-emerges. Meanwhile, the single currency is pressured by weak German data. German GfK Consumer Climate dropped from 10.6 to 10.5 points. The index of economic expectations rose to 22.2 in August from 15.7 in July. The indicator of income expectations was 52.6 against 57.5 a month ago. At the same time, the propensity to buy fell to 55.2 from 56.2 in the previous month.

US dollar remains steady after today’s data. US Q2 GDP growth was revised up to 4.2% qoq, from 4.1% qoq. GDP price index was unrevised at 3.0%. European stocks are mixed. FTSE fell by 0.31%. DAX rose by 0.11% while CAC was up 0.20%.

USD/TRY is rising another 3% today and hits as high as 6.4732. Fall of the Turkish lira resumed yesterday, after Moody’s downgraded credit rating of twenty Turkish financial institutions. Moody’s also warned that “In the next 12 months around USD 77 billion of foreign currency wholesale bonds and syndicated loans, or 41% of the total market funding, needs to be refinanced.

The Turkish banks hold around USD48 billion of liquid assets in foreign currency and have USD57 billion compulsory reserves with the Central Bank of Turkey, which would not be entirely available.” The Turkish central bank CBRT said today that it’s altering banks’ borrowing limits for overnight transactions, which effectively tightens liquidity by ending unrestricted funding it has offered since August 13.

Today’s data also showed, that France Q2 GDP grew 0.2% qoq, unrevised from initial estimate. UK BRC shop price index rose 0.1% yoy in August, up from July’s -0.3% yoy fall.