August 10, 2018 / 1:46 PM / 3 months ago

FOREX-Euro tumbles as investors fear bank exposures to Turkey

    * Turkish lira plunges, sparks broad risk aversion
    * Euro affected by fears of bank exposures to Turkey
    * British pound drops on concern of "hard" Brexit

 (Updates prices, market activity and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, Aug 10 (Reuters) - The euro sank to its lowest
against the greenback in more than a year on Friday after a
report that the European Central Bank (ECB) was growing
concerned about the exposure of banks to a dramatic slide in the
Turkish lira.
    Turkey's lira plunged as much as 14 percent on Friday as
worries about President Tayyip Erdogan's influence over monetary
policy and worsening U.S. relations snowballed into a market
panic that also hit shares of European banks.
    The Financial Times reported on Friday that the ECB had
concerns about banks in Spain, Italy and France and their
exposure to Turkey's woes.
    “You’ve had a fairly sharp move lower in the euro and it’s
broken through key technical levels as well,” said Richard
Franulovich, head of FX strategy at Westpac Banking Corp in New
York.
    The euro dropped below technical support at $1.15
to $1.1421, down 0.91 percent on the day and the lowest since
July 2017. Against the yen, the euro slid 1 percent to 126.79
yen, a two-month low.
    The lira added to losses after U.S. President Donald Trump
said he had authorized higher tariffs on steel and aluminum
imports from Turkey.
    Erdogan earlier told Turks to exchange gold and hard
currency into lira, framing the crisis as a "national battle"
against economic enemies.
    “He spoke today sounding very combative and defiant instead
of possibly offering a bit of fig leaf to the U.S.,” said
Franulovich.
    The flight from risky assets heaped pressure on
commodity-linked currencies including the Australian dollar,
which fell 1 percent to $0.7280, an 18-month low.
    "Risk aversion is taking control again, putting pressure on
emerging market currencies while letting the safe haven dollar
and the Swiss franc appreciate," said Antje Praefcke, a currency
strategist at Commerzbank in Frankfurt.
    The dollar index edged only slightly higher after data on
Friday showed that core consumer prices rose 0.2 percent in
July, in line with economists’ expectations and the same gain as
in May and June.
    The British pound dropped to its lowest levels in over a
year on concerns about a "hard" Brexit.
    
    ========================================================
    Currency bid prices at 9:17AM (1317 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1421        $1.1526     -0.91%         -4.79%      +1.1536     +1.1418
 Dollar/Yen       JPY=        111.1000       111.0700    +0.03%         -1.39%      +111.1600   +110.6100
 Euro/Yen         EURJPY=     126.91         128.03      -0.87%         -6.12%      +128.1100   +126.8000
 Dollar/Swiss     CHF=        0.9944         0.9932      +0.12%         +2.06%      +0.9975     +0.9932
 Sterling/Dollar  GBP=        1.2742         1.2822      -0.62%         -5.70%      +1.2836     +1.2740
 Dollar/Canadian  CAD=        1.3088         1.3048      +0.31%         +4.06%      +1.3122     +1.3043
 Australian/Doll  AUD=        0.7298         0.7370      -0.98%         -6.45%      +0.7380     +0.7282
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1359         1.1452      -0.81%         -2.82%      +1.1461     +1.1358
 Euro/Sterling    EURGBP=     0.8961         0.8987      -0.29%         +0.88%      +0.8991     +0.8936
 NZ               NZD=        0.6596         0.6612      -0.24%         -6.92%      +0.6621     +0.6572
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.3519         8.3177      +0.41%         +1.77%      +8.3785     +8.3084
 Euro/Norway      EURNOK=     9.5404         9.5879      -0.50%         -3.13%      +9.5940     +9.5281
 Dollar/Sweden    SEK=        9.1342         9.0068      +0.50%         +11.37%     +9.1409     +8.9998
 Euro/Sweden      EURSEK=     10.4340        10.3822     +0.50%         +6.05%      +10.4615    +10.3580
 
 (Additional reporting by Tom Finn in London)
  
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