The Japanese yen lost ground yesterday after hitting one-month highs against sterling over the weekend. Following a decrease in the value of global stocks at the back-end of last week, we saw demand increase for the traditionally safe-haven yen. These gains were pegged back yesterday, however, following the release of weaker-than-forecast trade balance figures.
We’ve seen emerging-market equities extend their longest decline since November. The South African rand continued its recent decline, dropping against the majority of its 16 most-traded peers yesterday and further extending its multi-year lows against sterling. Weak Chinese manufacturing data has coincided with investor concern that US tapering will hamper the growth of emerging markets, hence the significant weakening of the rand. Despite this, Turkish lira staged a small recovery yesterday, rebounding from record lows as the central bank announced it will stabilise prices.
A quiet day on the data front today means that other factors will be particularly influential. Political unrest in Turkey means the lira remains particularly fragile, and markets will be looking ahead to tomorrow’s announcement from the US Federal Reserve.
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