USD/TRY: Getting ready for an assault of 18.6000

USD/TRY keeps the consolidative mood well in place for yet another session on Wednesday, always in levels just shy of the 18.60 mark.

USD/TRY remains bid ahead of the CBRT event

USD/TRY still appears capped by the 18.60 region amidst the lack of direction in the greenback as well as alternating risk appetite trends on Wednesday.

The lira keeps the downtrend well in place nonetheless, from time to time limited by intervention and closely following the next steps by the Turkish central banks (CBRT) as well as the government plans to fight inflation (if any at all).

The CBRT meets next week and is expected to cut the One-Week Repo Rate once again, according to latest comments from President Erdogan.

In the domestic calendar, Industrial Production expanded at an annualized 1.0% in August, advancing for the 26^th consecutive month, although at a slower pace. Additional data saw Retail Sales expand 3.7% MoM also in August and 9.0% from a year earlier.

What to look for around TRY

USD/TRY keeps navigating the area of all-time tops near 18.60 amidst the combination of omnipresent lira weakness and bouts of strength in the dollar.

So far, price action around the Turkish lira is expected to keep gyrating around the performance of energy and commodity prices - which are directly correlated to developments from the war in Ukraine - the broad risk appetite trends and the Fed’s rate path in the next months.

Extra risks facing the Turkish currency also come from the domestic backyard, as inflation gives no signs of abating (despite rising less than forecast in the last three months), real interest rates remain entrenched well in negative territory and the omnipresent political pressure to keep the CBRT biased towards a low-interest-rates policy.

In addition, the lira is poised to keep suffering against the backdrop of Ankara’s plans to prioritize growth (via higher exports and tourism revenue) and the improvement in the current account.

Key events in Türkiye this week: Industrial Production, Retail Sales (Wednesday) – End Year CPI Forecast (Friday).

Eminent issues on the back boiler: FX intervention by the CBRT. Progress of the government’s scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Structural reforms. Presidential/Parliamentary elections in June 23.

USD/TRY key levels

So far, the pair is gaining 0.12% at 18.5867 and faces the next hurdle at 18.5980 (all-time high October 11) followed by 19.00 (round level). On the downside, a break below 18.1852 (55-day SMA) would expose 17.8590 (weekly low August 17) and finally 17.7586 (monthly low).