- USD/TRY regains upside traction near 8.0000 on Thursday.
- The stronger dollar adds selling pressure to the lira.
- Turkey’s 10-year yield approach the 20% mark.
The lira fades Wednesday’s optimism and resumes the downside, lifting USD/TRY back to the vicinity of the 8.0000 neighbourhood on Thursday.
USD/TRY faces further upside near-term
USD/TRY quickly reverses Wednesday’s small gains and returns to the upward path with the immediate target at the key 8.00 mark amidst dollar gains and a moderate pullback in crude oil prices.
In fact, the firm note in the greenback remains well and sound and pushes the US Dollar Index to new 2021 highs, while the barrel of the European Brent crude is down around 3% following Wednesday’s important advance on the Suez Canal issue.
In the meantime, the sentiment around the lira continues to deteriorate, as investors pile up to dump Turkish assets amidst sky-rocketing rates, speculations of an inflationary spiral and bets regarding the potential next move by the central bank (CBRT).
What to look for around TRY
Occasional pockets of strength in the Turkish lira should be seen as temporary only against the current political/monetary backdrop. 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 Capacity Utilization (Friday).
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 gaining 0.36% at 7.9512 and faces the next up barrier at 8.2881 (2021 high Mar.22) followed by 8.5777 (all-time high Nov.6 2020) and finally 9.0000 (psychological level). On the other hand, a drop below 7.7772 (high Mar.9) would aim for 7.4450 (200-day SMA) and then 7.1856 (monthly low Mar.19).
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
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.