Lira gains see some mild gains in risk assets
The yen and dollar moved a little lower and equities also pared some of its losses earlier. But in good time, this may very well be a short-lived recovery. The Turkish central bank is stepping up measures to limit the lira's losses but the actions so far are a far cry from what a commanding rate hike may offer at this point.
If anything, it goes to show that the CBRT is unwilling to defy Erdogan's wishes and this may be the extent of the support they can offer for the lira. Now, it's over to the finance ministry to see what they can do.
Capital controls aside, I don't see how else these support measures can aid the lira in pulling off a sustained rally.
As for EUR/JPY, the pair is now heading lower again as the lira is also succumbing to losses once more. USD/TRY is now up to 6.63 after having fallen to 6.45 on the back of those announcements earlier.
The 125.31 level is a key support along with the 125.00 handle for EUR/JPY. The lowest daily close this year is at 125.51 - back in May - so we may very well threaten that when we near the day's end later.