USD/TRY rebounds from lows, back near 5.60

  • USD/TRY met support near the 10-day SMA around 5.54.
  • Turkey jobless rate eased to 12.8% in May.
  • US Retail Sales came in above expectations in July.

The Lira is trading on a firm note today, dragging USD/TRY to the 5.54 area, where sits the key 10-day SMA and some support turned up so far.

USD/TRY met support near the 10-day SMA

The pair has reversed yesterday’s gains, as the Lira managed to regains some traction on the back of the better mood in the EM space.

In fact, recent announcement from the White House delaying US tariffs on some Chinese products lifted the morale among investors, helping the riskier assets to regain part of the ground lost in past sessions

In addition, TRY remains also vigilant on potential frictions vs. the US regarding the safe zone in northern Syria.

In the docket, Turkey’s unemployment average ticked lower to 12.8% in the 3-months ended in May, while Industrial Production figures and the Budget Balance results are expected tomorrow.

What to look for around TRY

The Lira met strong resistance in the 5.45 area so far, or multi-month highs vs. the Greenback. However, the current preference for safer assets in response to the US-China trade war has undermined extra gains in TRY for the time being. On another front, newly appointed Governor M.Uysal appears to have inaugurated an Erdogan-sponsored easing cycle following the recent interest rate cut by the CBRT. Whether this move was untimely (as regarded before the rate cut) it remains to be seen. In the meantime, TRY remains supported by the ongoing ‘hunt for yield’, as domestic rates still look attractive in spite of the recent cut. On the more macro view, the country needs to implement the much-needed structural reforms (announced in April) to bring in more stability to the currency and sustain a serious recovery in both economic activity and credibility.

USD/TRY key levels

At the moment the pair is receding 0.48% at 5.5849 and faces the next downside barrier at 5.5395 (10-day SMA) seconded by 5.4494 (monthly low Aug.8) and then 5.3918 (78.6% Fibo of the February-May up move). On the other hand, a surpass of 5.6347 (monthly high Aug.13) would expose 5.7025 (50% Fibo of the February-May up move) and finally 5.7727 (high Jul.25).

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