Tomorrow has some potentially market-moving news. It is the first Friday of the month which means we get the usual raft of data from the US, the headline is the NFP figure followed by the unemployment rate in the US and this months big ticket item the average hourly earnings
. If earnings
pick up above the forecast 2.8% (last month 2.7%) then it will add real momentum to the dollar as it will speak to a faster interest rate hiking cycle, it is a realistic possibility that the Fed is already behind the curve with the US economy and is going to have to apply the brakes sooner rather than later. If rates are going higher then the emerging market economies are those likely to suffer most and the Turkish Lira seems particularly at risk, Turkey has increased its interest rate to 17.5% in recent months (thats not a typo 17.5%) and as you can see from the chart the technicals still look really bullish
Friday is also the day that the US tariffs against China are due to start and if they do it could trigger an increase in trade war intensity. China have said that as soon as the tariffs become effective they will introduce their own and Mr Trump has threatened that if China does respond he will quickly impose tariffs on another huge section of Chinese goods.
The countries most at risk from trade wars are Emerging markets which puts the Turkish lira in the firing line again.
If the data was not due tomorrow I might have just bought on the technical data but the plan is as follows
If US data is good and tariffs go ahead I will buy the USDTRY
risking 2% of equity hoping for a higher than usual risk reward of 2:1