Turkish Lira Remains Low. What About the Dollar and Euro?

The Turkish Lira plunged as much as 15% after President Recep Tayyip Erdogan fired Naci Agbal, the country’s central bank governor, last Saturday.

The U.S. dollar continued rising on Thursday after skyrocketing to a four-month high against the Euro during the Asian session. Traders focused on various recovery outlooks for the United States and Europe. Despite that, risk appetite reduced due to surging coronavirus cases and renews lockdowns in several European countries.

German Chancellor Angela Merkel announced her decision to ditch plans for a lockdown over Easter, but that didn’t improve sentiment much.

Global stock markets tumbled down over the last two weeks, reaching their lowest point. Chinese technology shares sold off after the U.S, EU, and the U.K. sanctioned China. Investors were concerned that they would be de-listed from the U.S. stock exchanges.

On Thursday, the dollar index climbed up by less than 0.1% at 92.658. Before that, it had hit its highest point since November 2020, at 92.697.

James Athey, the investment director at Aberdeen Standard Investments, noted that the dollar index had broken the 200-day moving average. The currency’s next move will be crucial.

However, Federal Reserve Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen announced their confidence in the U.S. recovery on Wednesday. Improved sentiment may cause the greenback to lower.

How Did the Euro Trade?

The Euro declined by 0.1% against the dollar, at $1.1807 on Thursday. The common currency may drop to $1.16 over the next month – noted Stephen Gallo, the European head of FX strategy at BMO Capital Markets. According to him, the Eurozone’s third coronavirus wave, along with the relatively low vaccine rollout rate and a subdued fiscal impulse, will likely cause the EU’s recovery to lag North America by at least 2-3 months.

Gallo also added that handling the coronavirus vaccine rollout in Europe and resultant forms of protectionism might permanently deter investors.

Later today, European leaders will meet at a summit. They will likely discuss vaccine supply issues. On Wednesday, the EU tightened its oversight of COVID-19 vaccine exports. It may block shipments to countries with higher inoculation rates, including Britain.

Meanwhile, the Swiss National Bank kept its expansive monetary policy and the world’s lowest interest rate in place, announcing that the Swiss franc is still highly valued.

Commerzbank strategist Thu Lan Nguyen noted that the Swiss banks’ sight deposits have been quite stable since the fall. It suggests that the central bank has mostly withdrawn from the FX market. The franc tumbled down by 0.1% against the Euro at 1.1068.

The Australian and New Zealand dollars traded slightly higher, both rising by approximately 0.3% against the U.S. dollar. The Aussie and Kiwi managed to recover some of their losses from the previous two sessions.