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USD/TRY hits 8.0 for 1st time

NZD/USD – 4hr Candlesticks
Source: GKFX / MT4 (October 26, 2020)

NZD/USD has hit the top of a 2-month old rising channel pattern and is now forming a shorter-term rising channel pattern, which if it breaks could open up a decline to the bottom long-term channel lines.
 

TAKEAWAYS


•    German DAX slumps 3.7% after SAP stock slammed down 20%
•    New lockdowns restrictions in Europe cause big losses in travel stocks
•    Ant Group to raise $34.5 billion in biggest ever IPO
•    Turkish lira (USD/TRY) hits 8 handle for first time
•    DAY AHEAD: HSBC, BP, Microsoft earnings, US durable goods orders
 

GURU WISDOM


“Fear of the unknown is a destructive force. It causes people to make suboptimal choices by avoiding that fear.” – Cliff Lerner
 

MARKETS


The US dollar rallied as a haven, gaining against some of the most prominent pro-growth FX like the Aussie dollar and against the Canadian dollar as oil prices fell. Still, most FX pairs remain in the trading ranges that have been present for the past two months.

A profit-warning from German software giant SAP knocked 20% off the value of the shares, making a big dent in the Dax 30 index, which of course only has 30 stocks in it. Other European indices fell in unison over fears for the economic consequences of more severe lockdown restrictions in Italy and Spain. Travel and leisure stocks saw some of the biggest declines.

The Dow Jones had its worst decline since early September, finishing lower by 650 points having at one point been down over 800 points. Stimulus talks are going in roundabouts and the markets got the message it’s all for political theatre before the election. The number of new US virus cases slowed on Monday after hitting a new record on Friday. 
 

USD/TRY 8


The Turkish lira continued its recent bout of weakness, falling 1.7% versus the USD to the 8 handle for the first time after Turkish President Erdogan urged a boycott of French goods. The geopolitical risk layers on top of investor’s belief the CBRT will not do what it takes to get inflation expectations under control by raising interest rates. The currency has now depreciated for 9 weeks in a row, yet analysts see no bottom in sight without changes to Turkish foreign diplomacy and monetary policy.
 

Biggest IPO


It looks like China’s Ant Group is on course for the biggest IPO in history after a swelling of new investment demand for its future Hong Kong listed shares. The group will raise $34.5 billion, giving it a valuation of $131 billion. That would make it worth more than some of the biggest money-centre banks like Goldman Sachs. The raised sum would easily beat Saudi Aramco’s $29 billion raised last summer.
 

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