- USD/TRY grinds near all-time high as markets wait for CBRT Interest Rate Decision.
- Political turmoil in Turkiye, CBRT’s hesitance to raise rates despite inflation fears propel USD/TRY price.
- US debt ceiling woes, hawkish Fed concerns also keep Turkish Lira on bear’s radar.
USD/TRY seesaws around 19.90 as traders await the Central Bank of the Republic of Turkiye's (CBRT) Interest Rate Decision early Thursday. Also keeping the Turkish Lira (TRY) traders on their toes are the concerns about the US debt ceiling expiry and the market’s anxiety ahead of a slew of the US data.
Recently improved Turkish Business Confidence and easing inflation numbers seem to favor the CBRT’s likely defense of the current benchmark monetary policy rate of 8.5%. The same diverges from the US Federal Reserve (Fed) and allows the USD/TRY to remain firmer despite political uncertainty in Turkiye.
That said, the Minutes of the latest Federal Open Market Committee (FOMC) Meeting suggested that the policymakers are divided about the latest 0.25% rate hike from the US central bank. The same doubts the market’s bets on another such move in June.
Elsewhere, the global markets turn inactive during early Thursday, following a day full of risk aversion, amid mixed catalysts surrounding the US default fears. That said, US policymakers’ inability to deliver a debt ceiling extension deal and the looming long weekend for the House Representatives contrasts with the negotiators’ view that they see progress in the latest rounds of talks. Even so, global rating agencies like Fitch and Moody’s turned cautious about the US credit rating status while the US Treasury Department accepted their fears.
While depicting the market sentiment, the S&P500 Futures snap a two-day downtrend by bouncing off a two-week low to 4,138 by the press time, up 0.39% intraday at the latest. On the other hand, the US 10-year and two-year Treasury bond yields remain firmer at the highest levels since mid-March, close to 3.75% and 4.40% as we write.
Looking forward, the CBRT is likely to keep its currency Interest Rate unchanged at 8.5% and may become a non-event unless providing any surprises. However, the same can keep the USD/TRY buyers hopeful amid broad US Dollar strength and the Fed vs. CBRT divergence.
Technical analysis
A daily closing beyond an eight-month-old rising trend line, around the 20.00 round figure by the press time, becomes necessary for the USD/TRY bulls to refresh the record top. Alternatively, the 50-DMA support of 19.40 becomes crucial for the Turkish Lira bears to retake control.
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