- USD/TRY remains on the front foot around intraday top, reverses Friday’s losses.
- Risk-off mood underpins USD’s safe-haven demand, stock futures, yields are down.
- Ukraine, Russia brace for the key negotiations with looming fears of nuclear war, assassination of Kyiv’s leader.
USD/TRY seesaws around $14.08-10 after marking the upside gap to begin the week’s trading during Monday’s Asian session.
In doing so, the Turkish lira (TRY) pair portrays the market’s rush towards the US dollar, amid the broad risk-aversion wave. Also favoring the USD/TRY bulls are headlines suggesting further economic weakness of Turkey in 2022 due to high inflation and workers’ strikes.
The UK Times’ report suggests Russia ordered 400 mercenaries “to assassinate (Ukraine) President Zelenskyy and his government and prepare the ground for Moscow to take control,” gain major attention as far as the latest Russia-Ukraine news is concerned. Also important were weekend news suggesting Russian President Vladimir Putin’s order to their nuclear arsenal to stand on high alert, as well as the comments from European Commission President Ursula von der Leyen who said to the EU News that the European Union (EU) wants Ukraine in the bloc.
Elsewhere, Reuters' poll suggests an 11% GDP of Turkey in 2021 before easing to 3.5% in 2022. “Turkey's economy is expected to have expanded 11% in 2021 after bouncing back strongly from the pandemic, a Reuters poll showed on Tuesday, though it should cool off this year to 3.5% due to soaring inflation and a recent currency crisis,” said the survey.
In addition to the fears of easy GDP in 2022, workers’ strike in Turkey also weigh on the TRY prices. “Turkish workers are striking in numbers not seen since the 1970s to demand pay rises that enable them to buy a loaf of bread amid soaring inflation,” said The Telegraph.
Amid these plays, stock futures in the US and Europe remain red whereas the US 10-year Treasury yields also dropped nine basis points (bps) to 1.90% by the press time. Further, the US Dollar Index (DXY) gains around 0.85%, signaling the greenback’s demand.
Moving on, Turkey’s Q4 GDP and second-tier US data may decorate the calendar but major attention will be given to the talks between Moscow and Kyiv near the Belarus border.
Technical analysis
A clear upside break of the $13.93-95 horizontal area, comprising tops marked in November 2021 and January 2022, keep USD/TRY buyers hopeful to renew February 2022 high above $14.66.
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