USD/TRY bounces off six-week low as risks dwindle

USD/TRY takes the bids near 7.7450, up 0.66% intraday, during early Friday. The pair dropped to October 01 low the previous day while marking a two-day losing streak on Turkish President Recep Tayyip Erdoğan’s efforts to bolster the struggling economy. The latest moves could have taken clues from the market’s fresh fears of the coronavirus (COVID-19).

With over 150,000 daily record covid cases in the US, not to forget the highest infections in Japan since the early-pandemic era, global traders turn cautious and rush to the safe-havens. In doing so, the US dollar becomes their best choice.

Not only the COVID-19 numbers but comments from the Federal Reserve Chairman Jerome Powell, challenging the hopes of economic recovery, also weigh on the risk-tone.

Further, the US-China tension and fears that Turkey will have hard days under the Democratic leadership add jitters into the mood and trigger the fresh declines of the Turkish lira (TRY).

While portraying the trading sentiment, US stock futures and 10-year Treasury yields print mild losses while shares in Asia-Pacific also drop by press time.

Moving on, traders will keep eyes on September’s Industrial Production for Turkey, prior 10.4%, for immediate direction ahead of waiting for the US Michigan Consumer Sentiment Index for November, forecast 82 versus 81.8 previous. It should, however, be noted that the risk headlines will be the key as Turkey recently shuffled the central bank, finance and treasury team whereas the US leadership is about to change, not to forget about the covid and vaccine news.

Technical analysis

Although fresh selling awaits downside break of October low near 7.63, 100-day SMA near 7.86 will restrict the pair’s short-term upside.