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Big falls, thin trades: Trading Turkey’s lira

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Big falls, thin trades: Trading Turkey's lira
© Reuters. FILE PHOTO: A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey September 27, 2021. REUTERS/Cagla Gurdogan

By Saikat Chatterjee and Karin Strohecker

LONDON (Reuters) – The Turkish lira suffered a historic 15% fall on Tuesday in a session marked by thin trading volumes and dwindling liquidity, and gauges are pointing to more rocky times ahead.

Below are four charts depicting trading on a watershed day for the lira.

FROM FLOWS TO TRICKLES

The number of trades thinned out dramatically as the lira plunged to its record low of 13.45 to the dollar on Tuesday, data over the past week showed. The amount of deals peaked during that period when the lira stood at just under 10 to the dollar.

Price swings in thinning volumes are a classic sign of a market freezing up, with market makers shying away from offering trading liquidity while end-users are panicking to transact at any available prices.

Graphic – Lira trades: https://fingfx.thomsonreuters.com/gfx/mkt/zgpomkxoapd/liratrades.png

Graphic – Lira Volumes: https://fingfx.thomsonreuters.com/gfx/mkt/byvrjkwgeve/liravolumes.png

SOARING VOL

Implied volatility gauges for lira/dollar – indicating expected fluctuations ahead – on Tuesday raced to their highest level since Turkey’s 2018 currency crisis. The lira reversing some of its losses on Wednesday saw only a small pull back in implied volatility, showing that investors are betting on more swings ahead.

Derivative markets signal a dearth of option liquidity, with the fact that traders are shying away from large directional bets further exacerbating the price swings.

Graphic – Lira volatility: https://fingfx.thomsonreuters.com/gfx/mkt/jnvwexdmavw/Lira%20volatility.JPG

WIDENING GAP

Volatility in the lira is unlikely to end soon. Market gauges for longer-term measures of lira volatility suggest traders expect a rocky road ahead. One-year implied volatility indicators compared to one-month maturities are showing their widest gap since 2018.

Graphic – Lira volcurve: https://fingfx.thomsonreuters.com/gfx/mkt/akvezmwbnpr/liravolcurve.JPG

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Economy

Powell says Fed policy must address range of plausible outcomes

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Powell says Fed policy must address range of plausible outcomes
© Reuters. FILE PHOTO: Federal Reserve Chair Jerome Powell prepares to testify before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill in Washington, U.S., November 30, 2021. REUTERS/Elizabeth

By Jonnelle Marte and Lindsay (NYSE:) Dunsmuir

NEW YORK (Reuters) -With the U.S. economy growing strongly and supply-demand imbalances poised to persist in the near future, policymakers need to be ready to respond to the possibility that inflation may not recede in the second half of next year as expected, Federal Reserve Chair Jerome Powell said on Wednesday.

Powell, in his second day of testimony https://www.reuters.com/markets/us/powell-yellen-head-congress-inflation-variant-risks-rise-2021-11-30 in Congress, said policy will need to adapt as officials seek to bring millions of Americans back to work while also ensuring that the recent surge in inflation does not become entrenched.

“Almost all forecasters do expect that inflation will be coming down meaningfully in the second half of next year,” Powell said in a hearing before the U.S. House of Representatives Financial Services Committee. “The point is, we can’t act as though we are sure of that … We have to use our policy to address the range of plausible outcomes, not just the most likely one.”

Powell said the U.S. recovery is stronger than those of other major economies, thanks in part to more robust fiscal support. U.S. consumer spending surged in October and first-time applications for unemployment benefits are at a 52-year low, leading economists to raise their GDP growth estimates for the fourth quarter.

Still, consumer confidence dropped https://www.reuters.com/markets/us/us-consumer-confidence-ebbs-november-2021-11-30 to a nine-month low in November amid worries about the rising cost of living and pandemic fatigue. The new Omicron variant of COVID-19 is also creating more uncertainty for households and businesses.

Powell said Fed officials are monitoring the evolving economic landscape and acknowledged they might face “tension” as they pursue their dual mandate of achieving maximum employment and price stability.

“We have to balance those two goals when they are in tension, as they are right now,” Powell said. “But I assure you we will use our tools to make sure that this high inflation we are experiencing does not become entrenched.”

While wages are rising, particularly for low-wage workers, the increases are not happening at a pace that could spark higher inflation, the U.S. central bank chief said.

“We have seen wages moving up significantly,” Powell said. “We don’t see them moving up at a troubling rate that would tend to spark higher inflation, but that’s something we’re watching very carefully.”

On Tuesday, Powell told the U.S. Senate Banking Committee that Fed policymakers would discuss at their Dec. 14-15 meeting whether to end their bond-buying program a few months earlier than had been anticipated.

Last month, the Fed began reducing its purchases of Treasuries and mortgage-backed securities from $120 billion per month at a pace that would put it on track to complete the wind-down by mid-2022. The program was introduced in early 2020 to help nurse the economy through the pandemic.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Economy

In Brazil, a favela start-up delivers parcels where others fear to tread

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4/4
In Brazil, a favela start-up delivers parcels where others fear to tread
© Reuters. A member of the Favela Brasil Express carries bags with products to be delivered at Paraisopolis slum in Sao Paulo, Brazil, October 22, 2021. REUTERS/Leonaro Benassatto

2/4

By Leonardo Benassatto

SAO PAULO (Reuters) – For years this maze of narrow alleyways and precariously stacked cinder block homes was off limits for Brazilian e-commerce delivery companies, deemed impassable and dangerous.

Even as internet orders boomed during the pandemic, the residents of Paraisopolis, a poor community of 100,000 people in the heart of Sao Paulo, would often find their post codes rejected when they reached the online checkout.

“They blocked this region, considering it a risky area,” 21-year-old resident Givanildo Pereira Bastos said in an interview on Reuters Next.

To fix the problem Pereira started Favela Brasil Xpress, a delivery firm willing to go where others will not.

Parcels arrive at a distribution center before being sorted and delivered to their final destination, sometimes navigating the narrow lanes by tuk-tuk or bicycle. On occasion, deliveries must be done on foot.

Favela Brasil Xpress has 90 employees in Paraisopolis, all community residents. Across the country, the company operates in over half a dozen poor informal communities – known as favelas – in the states of Sao Paulo, Rio de Janeiro and Minas Gerais. Pereira expects to expand further.

“We had no idea how much favela residents consume through e-commerce,” Pereira said. “Just in Paraisopolis, there are around 800 deliveries a day.”

But finding addresses is not always easy, even for a resident like Pereira.

“Even I had some difficulty in making deliveries,” he said, recalling a delay in locating the home of one man who had been waiting four months for a card payment machine. By the time it arrived, the man’s business had closed down.

Pereira hopes his company can go some way towards reducing inequality here.

“We don’t want there to be two Brazils. … We want to live in one Brazil, where a favela resident has the same rights as someone who lives in a wealthy neighborhood.”

To watch the Reuters  Next conference please register here https://reutersevents.com/events/next

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Continue Reading

Economy

Mexican Workers Abroad Keep Sending Record Cash Back Home

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Mexican Workers Abroad Keep Sending Record Cash Back Home
Mexican Workers Abroad Keep Sending Record Cash Back Home

(Bloomberg) — Mexico’s remittances reached another record in October, powered by the U.S. economic recovery and a weaker peso that encourages workers abroad to send money back home to support their families. 

Latin America’s second-largest economy posted $4.82 billion in money sent by Mexicans abroad in October, the biggest inflow on record and a 34% gain compared to a year ago, the central bank said on its website Wednesday. The result topped all analyst estimates in a Bloomberg survey, which had $4.58 billion as the average forecast. 

The number of individual transactions grew to over 12.5 million, up from 11.6 million in September, according to the central bank.

Alberto Ramos, an economist at Goldman Sachs Group Inc (NYSE:)., wrote in a note that generous wages in the U.S. combined with a contraction of economic activity in Mexico and a competitive exchange rate led to the record amount.

“Solid workers’ remittance flows have been adding support to the current account and to private consumption, particularly for low-income families, who have a high propensity to consume and are the overwhelming recipients of such transfers,” he wrote. “The moderating activity and income growth profile in the U.S. should lead to a moderation in remittance flows to Mexico in coming quarters.”

Mexico’s President Andres Manuel Lopez Obrador has for months lauded the contribution of workers abroad, stating earlier this month that Mexico was on track to reach a total of $50 billion in remittances by the year’s end. Remittances to Mexico surpassed $42 billion so far in the first ten months of the year.

©2021 Bloomberg L.P.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Continue Reading

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