FX round-up: US dollar eases back after early surge to fresh 52-week high

Sterling is off its lows of the session, with traders wary of extending themselves too much, lest recent US dollar strength suddenly unwind.

As of 1518 BST, the pound was in fact higher by 0.13% against the US dollar at 1.27864, having earlier plumbed a low of 1.2730.

At the weekend, Turkish President Recep Tayyip Erdogan had dismissed the possibility of interest rate hikes to buttress the country's currency, the lira, saying that "economic war" was being waged against Turkey, and urged Turks to sell their gold and foreign exchange for lira.

To take note of, Russian foreign minister Sergei Lavrov was said to be travelling to Ankara as of Monday afternoon, even as Turkish officials hinted at a shift in their traditional allegiance towards the likes of Beijing.

That saw the US dollar spot index notch-up a fresh 52-week high at the opening bell of 96.5520 and climb as high as 7.2362 versus the lira, which was also a 52-week high.

However, on Sunday evening the Turkish central bank had announced various measures meant to help banks access the liquidity they required, be it in lira or foreign currencies.

In a statement, the monetary authority also pledged to "closely monitor the market depth and price formations, and take all necessary measures to maintain financial stability, if deemed necessary."

Not all observers were convinced of its commitment, with several urging authorities to hike interest rates and cut government spending in order to rein in inflation, yet for some analysts the damage from the situation in Turkey was likely to be contain

Against that backdrop, by the afternoon the Greenback had come off against each of those and was trading at 96.2210 and 6.8609, respectively.

And it was in fact dipping against the Russian rouble, slipping 0.05% to 67.7037.

However, it remained ahead by 0.54% to 6.8835 against the Chinese yuan, having earlier hit an intra-day high of 6.8874.

To take note of, the latest Commitment of Traders data published in the States on 10 August revealed that speculators' net 'long' US dollar position had increased for a fourteenth consecutive week, reaching a net position of $24.85bn.

The biggest changes in positioning were seen in euro and Sterling, with the number of net longs in euro/usd declining from 22,825 in the week before to 10,565, with analysts at Rabobank predicting more pressure in the wake of Turkey's troubles.

In cable meanwhile, the number of net shorts increased from -47,386 to -58,852, ahead of the restart of Brexit talks.