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Stock futures mixed, Japanese yen strengthens, Turkish lira falls

Yahoo Finance’s Jared Blikre breaks down how markets are trading just before the opening bell on Thursday.

Video Transcript

BRAD SMITH: Welcome back to "Yahoo Finance Live," everyone. Still some time before the opening bell here on this Thursday morning, or Friday's eve, as we continue to recap yesterday's decisions by the Fed. Let's check in on the major averages with Jared Blikre over at the Interactive. What do you got for us, Jared?

JARED BLIKRE: Well, I was looking at our currency board first because that's where a lot of the action has been. And we've seen this driving. Now, the US dollar has been on a tear overnight. This is after the Federal Reserve raised interest rates by 75 basis points yesterday, raised the expectations of that terminal rate via the dot plot. After that happened, the Bank of Japan, they intervened. And they sold some yen to buy-- or excuse me, they sold some dollars to buy yen. And they have $1.3 trillion worth of ours. So that gives them considerable firepower.

Now, they haven't intervened in our markets since about 1998. That was during the Russian debt crisis and also long-term capital management. Anybody remembers that? That required a bailout orchestrated by the New York Fed, but I digress.

Here's the US dollar versus the Japanese yen. And basically, if it's going up, that means a stronger dollar, a weaker yen. That's what's been happening all year long. But this is the two-day price action. Overnight, we saw this huge drop here. Now, this looks very dramatic, and it is pretty dramatic right here. But we've seen bigger interventions in the past, the Swiss Franc peg to the euro.

So all in all, I just want to show you a year to date chart. This doesn't even look like a huge move with respect to what's happened so far this year, 23%. The biggest concern is that Japan, their currency has been trading basically like an altcoin, as has been many other developed currencies around the world, not to mention emerging markets, guys.

JULIE HYMAN: Speaking of emerging markets, I'm just looking at the list of central bank actions today. South Africa raised interest rates. I think the Swiss National Bank raised interest rates.

JARED BLIKRE: A couple of days ago, yes.

JULIE HYMAN: And then there is Turkey as well.

JARED BLIKRE: Yes, the Turkish lira.


JARED BLIKRE: The gift that keeps on giving.


JARED BLIKRE: Let me pull up a chart of the Turkish lira. This is year to date. You can see the US dollar is up 37%. That means the Turkish lira has lost roughly a third of its value. Now, overnight, they cut rates. They cut rates by 100 basis points. And if you followed what's happened with the Turkish lira in years past, this has been par for the course, not a new strategy.

When everybody else is cutting-- or excuse me, when everybody else is raising, they are cutting, and vise versa. Nevertheless, their currency has been under a tremendous amount of pressure. Here is the last five years. And you can see a lot of fireworks with respect to the end of 2021. But they're bumping up against some all-time lows in the lira, all-time highs in the US dollar.

And it's not just the lira, it's other currencies around the world. Although they are not cutting, at least they're following the bandwagon here, guys.

JULIE HYMAN: Yeah. I know that philosophy among the Turkish Central Bank has been controversial, shall we say? Their inflation fighting is a little bit counter to what everybody else--

JARED BLIKRE: Inflation encouraging.

JULIE HYMAN: Yes, something like that. All right, thanks, Jared, appreciate it.