USDTRY dropped after Trump Speech
USDTRY dropped after Trump Speech
On 23 October, US President Trump announced that the United States will lift sanctions against Turkey because of a “permanent” ceasefire agreement between Turkey and Kurdish armed groups. After the news came, the Turkish lira, ETF and government bonds rose.
Turkey invaded northern Syria earlier this month, and Trump said Turkey’s ceasefire in the region is “permanent”. Trump said at the White House: “Unless something that we are not satisfied with, the sanctions will be lifted.” Trump said that the ceasefire in Syria has remained very good, and Turkey told the United States that they will permanently cease-fire. If Turkey fails to implement the agreement, sanctions will be re-applied, including tariffs on steel and other products. Trump said: “Let someone else fight over this long-bloodstained sand”.
President Trump also pointed out that small-scale US troops will still be maintained in the region (areas with crude oil) and will decide how to deal with crude oil in the future. Trump said that Turkish President Erdogan has done the right thing for his country and he will meet Erdogan shortly.
Donald Trump used this speech to respond to criticisms, even from members of his party. Their decision to withdraw US troops from northern Syria was considered as a major geopolitical mistake. It would allow the United States to abandon its allies and hand over its territory and influence to the regional enemy. He said: “Today’s announcement confirmed to Turkey the actions we took. Just a few weeks ago, Turkey also sneered at our actions. Now, people say, wow, what a great achievement, congratulations.”
After the news of the lifting of the sanctions, the Turkish lira soared against the US dollar in a short-term. Therefore, the US dollar depreciates against the Turkish lira. Now the USDTRY is 5.72759. Also, the IShares Turkey ETF rose to 3.6%. Turkish government bonds rose.
The Euro sees its longest streak in 15 years on the back of Christine Lagarde, announcing that the ECB will provide an extra $1T in stimulus to combat the effects of the Coronavirus. The Euro against the USD has spiked to 1.127 to just under 1.135 on the back of extra stimulus. Pointing to inflation and price stability as concerns, Christine Lagarde stated a “unanimous view that action had to be taken.” However, with over six years of Quantitative easing and negative rates, the Euro’s weakness has benefited its exporters. This may change as the ECB puts its foot down in trying to rescue Europe.
New Zealand has had no new Coronavirus cases in the past 13 days. America is about to top 105,000 cases. New Zealand went hard and fast. The United States Is barely squashing the curve. New Zealand is in the phase were politicians are arguing when to remove all restrictions. America is reopening to save a dwindling election. A stark contrast in the environment between the two countries. However, one thing remained constant – the returns in the major indices between both countries.
The US Dollar index weakens for the 7th straight day as investors’ appetite for risk increases. The AUD/USD has broken the 0.69 mark, with the USD weaker against its G10 currencies, with global indices rising on forward optimism on a quicker recovery from the effects of the Coronavirus. US Indices have seemed to quickly discount the effects of the protests as they continue for the 8th straight day.
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