Turkish lira falls to all-time low after election
After strengthening early in the global day, the dollar turned sharply lower Monday as conflicting reports emerged that U.S. President Barack Obama told a group of G-7 delegates that the strong dollar "posed a problem." (http://www.marketwatch.com/story/dollar-slips-after-obama-voices-concern-over-strong-greenback-2015-06-08)
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Bloomberg initially reported the comment, citing a French official, eliciting a hasty denial from a White House spokesperson.
Looking beyond reports about Obama's comments, some dollar weakness was expected Monday, said Naeem Aslam, chief market analyst at Avatrade, after its massive gains (http://www.marketwatch.com/story/dollar-direction-hinges-on-jobs-data-greece-developments-2015-06-05) following Friday's nonfarm payrolls report for May, as short-term investors booked profits from the move.
The ICE U.S. Dollar Index , a measure of the dollar's strength against a basket of six currencies mostly comprising the euro, was down 0.24% to 96.0460.
The euro strengthened to $1.1186, up from $1.1113 late Friday in New York; the pound was flat at $1.5277; the dollar weakened to 125.13 yen, from Yen125.61.
Aslam said that traders are now looking ahead to Thursday's retail-sales report, the most significant piece of economic data in a relatively sparse week. "If we get another good number on Thursday, that would be a confirmation of the nonfarm payrolls [report], and a September rate hike would be back on the table," Aslam said.
Kit Juckes, a currency strategist at Société Générale, said in a note to clients that the dollar's rally should quickly reassert itself "once the weekend dust settles."
Analysts widely expect the Federal Reserve to raise interest rates at its September meeting, in what would be the first increase since 2006. Fed Chairwoman Janet Yellen said two weeks ago that the central bank will raise rates this year, as long as U.S. economic data improves.
The expectation that the Fed will soon raise interest rates has been the primary driver of the dollar's strength since the beginning of last summer.
Turkish voters rejected President Recep Tayyip Erdogan's bid to consolidate power (http://www.marketwatch.com/story/turkish-election-sinks-erdogans-bid-to-cement-power-2015-06-07) in Sunday's parliamentary election, sending the Turkish lira sharply lower against the dollar, and other rivals.
The lira fell to an all-time low (http://www.marketwatch.com/story/lira-sinks-to-record-low-after-erdogan-election-setback-2015-06-08) around 2.8 to the dollar, and recently traded around 2.74, down from 2.66 late Friday in New York.
Investors pushed the lira lower on the expectation that the results "mean that the central bank of Turkey will get more power to do what it wants to do, rather than be told [by Erdogan] what it should do," Aslam said.