JPY, CHF, EUR, TRY flows: Safe havens benefit as TRY sells off

The CHF and JPY have risen and the EUR fallen as markets have taken fright over the detention of the mayor of Istanbul, one of president Erdogan’s main rivals. The Turkish lira has lost 10% and Turkish equities are limit down. In the greater scheme of things, it’s unlikely this will have a sustained impact on the major currencies, but the reaction may be indicative of the general market nervousness. In calmer times, major markets might have taken this in their stride, but more political uncertainty in the Middle East/Eastern Europe is not welcome in an already fragile environment. So while we doubt this will have a sustained impact, for today it could impart a generally risk negative tone on markets that have been recovering over the past week, favouring the safe haven currencies.