USD/TRY retreats from fresh record highs near 9.20 amid Erdogan's surprise move

USD/TRY continues to march higher near 9.200, new records highs.
Turkish President sacks three Central Bank’s policymakers in a sudden move.
US Dollar Index holds near 94.00, licking post-CPI wounds.

Rekha Chauhan Independent Analyst

USD/TRY posts gains for the fifth straight session on Thursday. The cross-currency pair peaked at all times at 9.188 following the previous session’s upside momentum. At the time of writing, USD/TRY is trading at 9.151, up 0.70% for the day.

The Turkish lira fell to its lowest level on record against the greenback following President Recep Tayyip Erdogan recent action. Erdogan abruptly removed deputy Central Bank Governors Semih Tumen, Ugur Namik Kucuk, and central bank’s Monetary Policy (MPC) member Abdullah Yavas in the early hours.

The members were replaced by Taha Cakmak as a deputy Central Bank Governor and Yusuf Tuna as an MPC member.

The currency has weakened about 19% so far in 2021 amid concerns about the central bank's credibility. With inflation, more than 19%, the Turkish central bank slashed its key interest rates by 100 basis points to 18% last month, in the face of President Erdogan’s calls for lower rates.

On the other hand, the greenback retreats from its yearly highs above 94.50, as investors discount higher US CPI readings and the FOMC insights on Fed’s tapering timeline.

As for now, traders are bracing for the US Initial Jobless Claims to gain fresh trading impetus.

Author

Rekha Chauhan

Independent Analyst

Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.