Please attribute the following commentary to Stephen Innes, senior trader at OANDA. For direct comment, call Stephen at firstname.lastname@example.org.
Holiday Thin Markets
Predictably quiet G-10 session with the US market closed for Thanksgiving as EM currencies dominated price action.
The Aussie dollar has held up remarkably well against broader USD strength and with the high betas, in general, coming under stress the Aussie performed remarkably well holding it's own versus EUR and JPY, providing underlying support. Commodity prices and oil supply cut headlines are providing essential support for the commodity bloc.
USDJPY continues to ratchet higher primarily driven by higher US bond yields and supportive US economic data. Apparently, the USDJPY continues to be the move favorable currency pair to express a US dollar strengthening bias; price action suggests markets still under positioned dollar, as any sell-offs are shallow and running into a wall of buyers. UST 10's touched a higher of 2.416% spurred by strong USD durable goods and solid consumer sentiment gauges.
The lack of intervention has traders probing higher as the supportive US economic data provided a significant tailwind for the broader USD moves.
Emerging Markets (EM)
The Turkish Central Bank surprised the market and decided to hike the benchmark rate by 50bps to 8% for the first time since 2014. It also increased the OLR to 8.50% by 25bps, with the OBR left unchanged at 7.25%. The consensus forecast was not rate change across the board. Regardless, the TRY lira fell aggressively as the rate hike did little to alter the markets worsening expectations or modifies the markets prevailing view for a weaker TRY.
USDINR traded to a hinge 68.86 feeling the fallout from the demonetization policy have investors concerned that this move will ever negative short-term economic growth concerns.