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Marketmind: Fresh lira low, focus on Fed


A look at the day ahead in European and global markets from Kevin Buckland

Another day, another market-positive appointment from Turkish President Tayyip Erdogan, and yet, another record low for the lira.

Erdogan is making all the right noises to signal a return to more orthodox policy, picking U.S. banking executive Hafize Gaye Erkan as head of the central bank. He had also named well-respected former finance minister Mehmet Simsek as minister in charge of the economy.

Even so, the lira is seemingly in freefall, reaching an unprecedented 23.54 per dollar in Asian hours and extending this month’s drop to 12%.

“Talk is cheap,” said NAB strategist Rodrigo Catril, summing up sentiment among investors. “The market needs to see it to believe it.”

Of course, the Federal Reserve is still the central bank at the centre of global attention, headlining a huge week for monetary policy next week when the ECB and Bank of Japan also meet.

Asian equities rode on Wall Street’s rally overnight – setting up Europe to do the same – after a jump in U.S. jobless claims boosted bets for the Fed to skip a rate hike next week.

However, surprise rate rises this week from central banks in Canada and Australia – which were both early pausers – have many analysts warning that the market may have grown complacent.

There’s more confidence surrounding the ECB decision, with a quarter-point increase fully priced for Thursday, and the only question being when the next quarter-point bump will come – with September most likely.

ECB Vice President Luis de Guindos has a chance to air his views at an event in Madrid.

Meanwhile, the BOJ is seen certain to leave stimulus settings alone next Friday, with Governor Kazuo Ueda telling parliament today that “there’s still some distance” to reaching its policy goals.

Elsewhere, the face-off between the SEC and crypto exchanges intensified as Binance – the biggest – told customers of its U.S. arm that it’s suspending dollar deposits and preparing to pause fiat withdrawal channels in response to what it called “extremely aggressive and intimidating tactics” by regulators.

The SEC supported freezing Binance’s assets on Thursday, after suing the exchange and its founder at the beginning of the week, alleging a “web of deception” that included artificially inflating trading volumes and comingling customer funds.

Key developments that could influence markets on Friday:

Sweden GDP and industrial production

Italy industrial output

ECB Vice President Luis de Guindos speaks at conference in Madrid

(Reporting by Kevin Buckland; Editing by Edmund Klamann)

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