- USD/TRY drops and tests 5.63, rebounds afterwards.
- Turkey trade deficit shrunk to TRY 2.50 billion in August.
- FinMin B.Albayrak unveiled The New Economic Program.
The Turkish Lira is gaining extra momentum at the beginning of the wee, dragging USD/TRY to fresh 6-week lows in the 5.63 region.
USD/TRY looks to domestic events, trade
The Lira managed to pick up extra pace on Monday after FinMin B.Albayrak announced in Ankara the ‘New Economic Program’, which addresses fundamentals such as inflation, growth, employment, the current account and exports for the 2020/2022 period.
Under this new program, Albayrak also revised the inflation target and he now sees consumer prices rising 12% this year, 8.5% in 2020, 6% in 2021 and 4.9% in 2022. In the same line, the economy is expected to expand 0.5% the current year and 5% in 2020, 2021 and 2022.
In addition, the government has also embarked in a tax reform, while it expects the current account to return to the positive territory this year.
In the domestic docket, the Economic Sentiment receded to 86 in September (from 87.1) on the back of a lower consumer and manufacturing confidence. Today, the trade deficit shrunk to TRY2.50 billion during last month.
Further out, TRY - and the rest of the EM FX space - should remain vigilant on the upcoming US-China trade talks, expected to resume early next month.
What to look for around TRY
The Turkish Lira has been trading within a consolidative mood vs. the US Dollar since early September. The lower bound of the range, where sits the 200-day SMA around 5.62, remains unbroken however. TRY has digested very well the two consecutive (massive) interest rate cuts by the CBRT since President R.T.Erdogan appointed M.Uysal as Governor, although investors remain sceptical of further strength in the currency in light of a still debatable ability of the country to embark on a more sustainable growth path (Erdogan set a target of 5% GDP growth in 2020) and to implement the much needed structural reforms, which remain crucial to bring in more stability to the currency and sustainability to domestic fundamentals. On the broader view, TRY looks supported by the ‘hunt for yield’, positive headlines from the US-China trade developments and prospects of extra interest rate cuts by the Federal Reserve.
USD/TRY key levels
At the moment the pair is losing 0.28% at 5.6466 and faces the next support at 5.6251 (200-day SMA) seconded by 5.5344 (low Aug.16) and then 5.4494 (monthly low Aug.8). On the upside, a surpass of 5.7040 (21-day SMA) would aim for 5.7453 (100-day SMA) and finally 5.7913 (high Sep.11).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD trades with mild positive bias near 0.6700, RBA Meeting Minutes eyed
The AUD/USD trades with a mild positive bias near 0.6695 during the early Asian session on Monday. The weaker US Dollar provides some support to the pair. The Fed’s Bostic, Barr, Waller, Jefferson, and Mester are set to speak on Monday.
EUR/USD: Could FOMC Minutes provide fresh clues?
The EUR/USD pair advanced for a fourth consecutive week, comfortably trading around 1.0860 ahead of the close. Progress had been shallow, as the pair is up roughly 250 pips from the year low of 1.0600 posted mid-April.
Gold looks to extend uptrend once it confirms $2,400 as support
Gold price continued to push higher last week and rose above $2,400 on Friday, gaining nearly 2% for the week. Investors will continue to scrutinize comments from Fed officials this week and look for fresh hints on the timing of the policy pivot in the minutes of the April 30-May 1 meeting.
AI tokens could really ahead of Nvidia earnings
Native cryptocurrencies of several blockchain projects using Artificial Intelligence could register gains in the coming week as the market prepares for NVIDIA earnings report.
Week ahead: Flash PMIs, UK and Japan CPIs in focus. RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.