- USD/TRY regains some upside traction above 14.60.
- The FOMC is expected to raise rates by 25 bps later on Wednesday.
- The CBRT is seen on hold at its meeting on Thursday.
The Turkish lira gives away part of the recent advance and lifts USD/TRY to the area above 14.60 on Wednesday.
USD/TRY focused on Fed, CBRT
USD/TRY navigates the positive territory after three consecutive daily drops, managing to reverse the weekly pullback to the 14.50 region despite the soft note in the greenback and the broad-based upbeat mood surrounding the risk complex.
In the meantime, all the attention is expected to be on the Federal Reserve gathering later in the session, where a 25 bps interest rate hike is very much priced in.
Next of note in the domestic docket, the Turkish central bank (CBRT) is seen keeping the One-Week Repo Rate unchanged at 14.00% at its meeting on Thursday.
What to look for around TRY
The lira regained some poise in past sessions, leaving the area of YTD lows vs. the US dollar around the 15.00 zone (March 11). In the very near term, price action in the Turkish currency is expected to gyrate around the performance of crude oil, the broad risk appetite trends, the FOMC event and the progress of the peace talks in the Russia-Ukraine front. Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of easing, real interest rates remain negative and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.
Key events in Turkey this week: CBRT Meeting (Thursday).
Eminent issues on the back boiler: Progress (or lack of it) of the government’s new 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. Earlier Presidential/Parliamentary elections?
USD/TRY key levels
So far, the pair is gaining 0.20% at 14.6461 and a drop below 14.5217 (weekly low Mar.15) would expose 13.7063 (low Feb.28) and finally 13.5091 (low Feb.18). On the other hand, the next up barrier lines up at 14.9889 (2022 high Mar.11) seconded by 18.2582 (all-time high Dec.20) and then 19.00 (round level).
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