Geopolitical events take centre stage after Turkey shot down a Russian jet, while GBP underperforms after dovish BoE Haldane comments
The most notable news of the day came in the form of Turkey shooting down a Russian jet and as such, TRY has been in focus. Concerns regarding an escalation of the conflict has led to weakness in the TRY, with Russian President Putin describing the act as ‘backstabbing’, while minister of foreign affairs has recommended that Russians do not travel to Turkey. As a guide, historically Russia have been second only to Germany in terms of size of population to visit Turkey and therefore this could have a significant effect on Turkish tourism and the economy. As well as a direct effect on TRY, the geopolitical events today saw a bid in fixed income products, with the interest rate differentials filtering through to USD/JPY, with the pair drifting lower throughout the session to move further away from the key 123.00 level.
Elsewhere today has seen softness in GBP, with this coming on the back of dovish rhetoric from BoE’s Haldane, who spoke alongside BoE’s Carney, Vlieghe and Forbes to the UK Treasury Committee. BoE’s Haldane stated that inflation and UK GDP growth risks are weighted to the downside, more so than embodied in the QIR. Amid this relatively dovish outlook, GBP/USD broke below the 1.5100 handle while EUR/GBP rose above 0.7050. GBP may well be in focus again tomorrow, with the notable UK highlight coming in the form of the Autumn Statement from UK Chancellor Osborne.
Elsewhere, tomorrow also sees a number of US data points given that many US participants will be away from their desks on Thursday and Friday due to the Thanksgiving holiday. Highlights include personal income, PCE deflator, durable goods orders, weekly jobs data, University of Michigan sentiment as well as DoE crude oil inventories.