TRYing To Get The Lights Back On In Turkey

 | Mar 31, 2015 10:56AM ET

It’s been a relatively quiet start to what could be a very interesting week in the FX market. While many traders are already looking ahead to a long holiday weekend, there is one big fly in the Easter Ham ointment: Friday’s non-farm payroll report. Major European banks and even the US stock market will be closed on Friday, but the Bureau of Labor Statistics will still release its marquee employment report, so traders are still encouraged to keep an eye on the markets early in Friday’s US session.

So far this week, we’ve seen a modicum of US dollar strength, both the G10 universe and against emerging currencies. As we noted yesterday, that dollar strength is partly attributable to month- and quarter-end flows, so when those flows fade later today, dollar bulls will be looking for a fresh catalyst. While we can’t definitively say whether this week’s employment reports will help or hurt the greenback, there are a couple of key developments to monitor in the EM realm as well.

USD/ZAR: South Africa’s Data Dump

This is a key week for South African economic data. Already we’ve seen private sector credit growth, which ticked down from 9.15% to 8.67% y/y in February and Trade Balance data (slightly worse-than-expected at a ZAR 8.48B deficit in February). Tomorrow will bring even more excitement, with the release of South Africa’s Manufacturing PMI, New Vehicle sales, and Consumer confidence figures. Beyond a tick higher in inflation, economic data from the Rainbow Nation has been almost unanimously weaker-than-expected of late, and if tomorrow’s data doesn’t show any improvement, USD/ZAR bulls could look to press the pair back up to its 13-year high near 12.50 later this week (from the current level of 12.18).

USD/TRY: TRYing to Get the Lights Back On

Meanwhile in Turkey, the government is struggling to get the lights back on after the country’s largest power outage in over a decade. Not surprisingly, the Turkish economy to essentially grind to a halt with major airlines, public transportation, and many important factories shutting down. Though engineers estimating that the power grid could remain on the fritz for a full 24 hours, USD/TRY traders remain sanguine for now: the pair is only ticking up modestly to 2.61 as we go to press, but if there are any setbacks in the power restoration process, USD/TRY could make a run for its all-time high near 2.65 in short order.