The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
TRY: no happiness on gas discovery
This Friday, the Turkish President Recep Tayyip Erdogan announced the biggest natural gas discovery Turkey ever had. The gas field was found in the Black Sea.
Fundamentally, that’s very good news for Turkey. With this discovery – and with the successful development of the gas field - it would no longer need to rely on Russia, Iran, or Iraq in providing its’ economy with such a key energy source like gas. But…
The field resulted to be less than expected. So the impact of this news is not as strategic as it was expected. Rather, tactical. However, it does give Turkey another leverage at hand, especially in view of its’ rally to become a primary regional power and beyond.
The TRY initially took over the USD, probably hoping for greater news – greater both tactically and geographically. USD/TRY dropped below 7.20. Afterwards, however, it reversed all the gains getting back above 7.30.
Currently, USD/TRY is at strategic highs, and no gas field exploration seems to reverse the trend in the long run. 7.40 is a very viable target for the mid-term horizon.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.