Stocks add to recent gains; TRY recovery remains fragile

Summary:

It’s been another day of steady gains for US indices so far with the US500 moving closer still to its record peak. The market is now within 1% of its all-time high and is on course for a 4th consecutive day of gains.

Another market near its all-time high is the USDTRY as the Lira remains under pressure. The Lira looked to recover after dropping sharply yesterday but the the outlook for the currency remains fragile. The CBRT cut its reserve requirement ratio but this did little to ease the sell-off and there remains a fair chance that further downside lies ahead.

It’s a fairly quiet day on the economic calendar with the biggest release this afternoon the Canadian Ivey PMI. The figure itself was softer than expected with a reading of 61.8 well below the 64.2 expected, marking the second time in the last 3 releases that this indicator has disappointed. USDCAD has seen a bounce from a long term trendline and recent lows around 1.2960 are now a possibly key reference point.

The Swiss franc could arguably be described as one of the most overvalued major currencies. However, in a medium term CHF’s performance depends more on risk appetite changes as well as the Swiss National Bank’s desired level than macroeconomic trends. We look more in depth at the currency here and the potential for some downside going forward.