USD/TRY prints mild losses above 7.7000 with eyes on CBRT rate decision

USD/TRY refreshes intraday low while breaking the recent trading range below 7.7156.
US dollar fails to keep the latest uptick as risks dwindle.
CBRT expected to announce a third rate hike of 2020.

Anil Panchal FXStreet

USD/TRY consolidates near the intraday low of 7.7020, currently down 0.14% on a day around 7.7055, during early Thursday. The quote recently broke a choppy trading range between 7.7156 and 7.7048 as the US dollar sold off due to the fresh risk aversion wave. However, the downside couldn’t get much appreciation as pair traders await monetary policy decision from the Turkish central bank (CBRT).

With the recent changes in the central bank and the finance ministry, President Recep Tayyip Erdoğan has already shown readiness to keep the markets up despite the coronavirus (COVID-19) woes. Considering this, global markets expect the CBRT to announce a rate hike of from 10.25% current level to 15%. However, the newly appointed CBRT Governor Naci Agbal is known for extreme moves and hence surprises stay awaited for the USD/TRY traders.

On Wednesday, Turkey's President Recep Tayyip Erdogan cited readiness to favor production, investment, employment, and exports for economic growth during the speech at the Turkish Union of Chambers and Commodity Exchanges.

While following the same, TD Securities said, “We think the Bank will be forced to deliver large-scale hikes in order to make good on the promise of doing the right thing and becoming more orthodox. This is necessary to keep the positive lira momentum alive that had TRY rally more than 11% last week.”

Talking about the risks, a covid resurgence in the US recently pushed New York to close down the schools for personal attendance while also indicating Tokyo’s highest alert level. Additionally, the US, Australia and the UK conveyed their angst versus China’s treatment to the people of Hong Kong whereas Brexit chatters continue ahead of today’s key European Union (EU) summit.

Moving on, the latest strength of the Turkish Lira (TRY), coupled with the risk of not witnessing a much wider rate hike than expected, challenges the USD/TRY bulls.

Technical analysis

Unless breaking the 100-day EMA level of 7.5827 USD/TRY bears are less likely to eye the late-September low near 7.5025.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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