USD/TRY meets some resistance in the 8.4000 area

USD/TRY’s upside run out of steam ahead of 8.4000.
CBRT’s Kavcioglu advocated for the tight monetary stance for now.
The One-Week Repo Rate will be the main tool of monetary policy.

Pablo Piovano FXStreet

The Turkish lira depreciated to as low as the vicinity of 8.4000 vs. the dollar during early trade, although it regained some composure afterwards and dragged USD/TRY to the current 8.3000 region.

USD/TRY still looks to the CBRT

USD/TRY now struggles for direction after meeting some resistance in the 8.4000 neighbourhood earlier on Wednesday, challenging at the same time to halt the so far 4-day positive streak.

Investors, in the meantime, keep the negative view on the lira unchanged amidst escalating speculations of the resumption of the loose stance by the Turkish central bank (CBRT) as soon as at its next meeting in April.

Still around the CBRT, Governor Kavcioglu said the central bank expects to keep the status quo around monetary conditions, while he confirmed the One-Week Repo Rate to be the main monetary policy tool amidst the renewed pledge to bring down inflation to the bank’s 5% target.

Earlier in Turkey, the trade deficit widened to $3.30 billion in February and the Economic Confidence Index improved to 98.90 in March (from 95.80).

What to look for around TRY

The near-term outlook for the lira remains fragile to say the least. The new CBRT Governor S.Kavcioglu is expected to reverse (wipe out) the shift to a market friendly approach of the monetary policy that was successfully implemented by former Governor N.Agbal back in November 2020. President Erdogan’s appointment of Kavcioglu demonstrated once again whose hand is rocking the monetary cradle in Turkey and will most likely be the prelude of the return to unorthodox/looser measures of monetary policy in combination with rapidly rising bets of a balance of payments crisis and a drain of FX reserves. Against this backdrop, it will surprise nobody to see spot trading around 10.00 in the months to come.

Key events in Turkey this week: March’s Manufacturing PMI (Thursday).

Eminent issues on the back boiler: Potential US/EU sanctions against Ankara. Government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Much-needed structural reforms. Growth outlook vs. progress of the coronavirus pandemic.

USD/TRY key levels

At the moment the pair is retreating 0.07% at 8.3027 and a drop below 7.7772 (high Mar.9) would aim for 7.4724 (200-day SMA) and then 7.1856 (monthly low Mar.19). On the upside, the next up barrier is located at 8.4526 (2021 high Mar.30) seconded by 8.5777 (all-time high Nov.6 2020) and finally 9.0000 (round level).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD weakens below 1.3450 as US-Iran uncertainty boosts safe-haven US Dollar

The GBP/USD pair loses ground to near 1.3425 during the early Asian session on Tuesday. Uncertainty surrounding US-Iran talks drives traders toward a safe-haven currency such as the US Dollar against the British Pound. All eyes will be on the US July jobs data, which is due later on Friday.

EUR/USD flatlines above 1.1500 as traders turn cautious ahead of US NFP data

The EUR/USD pair holds steady around 1.1505 during the early European trading hours. Markets remain cautious ahead of the crucial US July jobs report, which is due later this week. Eurozone inflation ticked up in July, bolstering the case for a rate hike from the European Central Bank. The headline Eurozone inflation rose to 2.9% YoY in July from 2.8% in June, in line with expectations.

Gold consolidates above $4,050 amid Fed hike bets and Iran uncertainty

Gold seesaws between tepid gains and minor losses during the Asian session as traders seem hesitant and opt to wait for further developments surrounding the Middle East crisis. The US Dollar struggles to build on the previous day's solid bounce from the lowest level since Mid-June and acts as a tailwind for the bullion. However, the uncertainty over US-Iran peace talks helps limit the downside for the buck.

Ripple and Stellar steady as derivatives data points to easing downside pressure

Ripple and Stellar show mixed price action, with XRP holding above the key $1 support zone while XLM faces rejection at $0.173. Meanwhile, improving derivatives metrics alongside fading bearish momentum suggest that the downside pressure may be easing for both altcoins. Derivatives data shows mild bullish sentiment among traders.

NFP week: What awaits Bitcoin and Gold

This is an NFP week as markets brace for the release of a large influx of job market statistics. The data rollout begins with the JOLTS Job Openings report on Tuesday, continues with the ADP Employment report on Wednesday and Jobless claims on Thursday, and finishes with the Nonfarm Payrolls report on Friday.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.