Turkey Military Coup-Lira Sinks, EUR/USD Down & USD/JPY Up
As the Turkish Prime Minister, Binali Yildrim announced that a group within Turkey’s military has tried to overthrow the government and certain ‘security forces’ have been called to do what is needed, the Turkish Lira fell to a 3-week low against the US Dollar. This happened on late Friday in U.S. trading. The reports of the attempted coup also fueled safehaven bids for the U.S. Treasury bonds, and hence, paring their earlier losses.
Last, the Turkish Lira was down 5% at 3.03 lira/dollar. Vassili Serebriakov, a currency strategist at Credit Agricole in New York wasn’t really surprised with the Lira falling. In fact, he said that the latest headlines on Turkey is probably the reason why the dollar has surged.
This is an ongoing coup in Turkey. Many details are still unclear, but the ongoing event could result in either a crushing of the rebellion or a successful coup. Worst case scenario, a civil war is also expected!
Apparently, tanks have taken over the streets of Ankara and maybe Istanbul even. It’s still a developing story and many have even seen military aircraft flying above. Another place that has been affected is the Istanbul Ataturk airport, which was in the news recently for the recent terror attack there. The airport has reportedly been closed to all flights.
There are many contradictory reports about who the insurgents actually are. Are they a small or big group within the army? They have taken over the TRT TV station, but it’s quite evident that they don’t control all media. In fact, Yildrim gave a statement in an interview talking about the coup and also mentioning that all those who are responsible will be severely punished.
The military also gave a few statements as below.
The Turkish Armed Forces have taken over the administration of the country entirely in order to reinstate constitutional order along with human rights and freedom, the rule of law as well as the general security that was damaged.
However, all international agreements still remain intact. We also hope that all our good relationships with all the countries still continue.
There have also been reports that the military are clashing with the police who have been loyal to the regime. Some other reports have stated that the Turkish president Erodgan is seeking refuge in Germany.
The Coup Effect on the Forex Market
Although it happened towards the closing of the trading week, the EUR/USD were in fact affected. They were on the downside when it closed and fell to 1.1028. Another thing to be noted is that the pair were anyways on the decline during the last few hours of trading before they Turkey coup affected their slide.
On the other hand, USD/JPY strengthened. The dollar rose to a 3-week high against the yen on Friday. It was on its way towards the biggest weekly gain against the yen in 17 years. This, after strong Chinese and U.S. economic data reduced the appetite for the yen as a haven from risk.
The dollar rose to 106.30 yen. Its strongest level in Asian trade since 24 June. Initially, it had retreated from those gains. But a strong report on the U.S. retail sales sent it back up toward session highs. The dollar was last up 0.5% to 105.87 yen.
The U.S. retail sales rose 0.6% in June outpacing the 0.1% rise expected by economists. This was the 3rd straight increase monthly and literally lifted the sales 2.7% against last year. The chief currency strategist at Oanda in Toronto, Dean Popplewell was of the opinion that this data was a positive indication of consumer demand.