- USD/TRY pares CBRT-led gains as firmer sentiment weighs on USD.
- Biden-Putin summit, Blinken-Lavrov talks favor hopes of a diplomatic solution to the Ukraine-Russia tussles.
- Turkish opposition leader braces for victory over Erdogan in 2023 elections despite being unclear on candidature.
- CBRT kept benchmark rates unchanged at 14.0%, fuelled markets with repo actions.
USD/TRY struggles to keep the bounce off the intraday low, down 0.36% on a day around $13.61 ahead of Monday’s European session.
The Turkish lira (TRY) pair refreshed a five-week high early in the Asian session before taking a U-turn from $13.78.
While the pair’s initial up-moves could be linked to chatters surrounding the Turkish central bank’s (CBRT) latest inaction and political plays in Ankara, the pullback moves could be attributed to the market’s risk-on mood amid headlines concerning Russia-Ukraine tussles.
CBRT kept the benchmark rates unchanged at 14.0% in the last week but kept the markets liquid via repo auctions. The Turkish central bank also said, "Expecting disinflation process to start on the back of measures taken." Elsewhere, Reuters reports political challenges for the current President Recep Tayyip Erdogan. The news said, “A veteran Turkish political leader who has struggled for years to have President Tayyip Erdogan voted out of office says it is "very clear" that his dream is drawing nearer, even as doubts remain about whether he will be the main opposition candidate at presidential elections set for 2023.”
On a different page, risk appetite improved amid fresh chatters over a summit between US President Joe Biden and his Russian counterpart Vladimir Putin. Also weighing on the metal’s safe-haven demand is the scheduled meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov. However, headlines conveying the US preparedness to levy harsh sanctions on Russia, in case of Ukrainian invasion, keep the market optimists on the edge.
Other than the geopolitics, recently easy Fedspeak also weighs on the USD/TRY prices. That said, Chicago Fed President and FOMC member Charles Evans said on Friday that the current Fed policy had been "wrong-footed" in the face of high inflation, but may not need to become restrictive. On the other hand, New York Federal Reserve Bank President John Williams and the No. 2 official on the Fed’s policy-setting panel mentioned, "I don’t see any compelling argument to taking a big step at the beginning."
Amid these plays, the S&P 500 Futures reverse the early Asian loss of around 0.50% while the US Dollar Index (DXY) remains pressured around 95.80 by the press time.
Looking forward, the first readings of the US PMIs for February and Fedspeak will join the US Core PCE Price Index, the Fed’s preferred inflation reading, to decorate this week’s calendar. However, major attention will be given to risk catalysts for clear directions.
Technical analysis
Unless providing a daily close below the monthly support line and 21-DMA, around $13.55, USD/TRY buyers remain hopeful to challenge the yearly peak surrounding $13.95.
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
EUR/USD: The first upside target is seen at the 1.0710–1.0715 region
The EUR/USD pair trades in positive territory for the fourth consecutive day near 1.0705 on Wednesday during the early European trading hours. The recovery of the major pair is bolstered by the downbeat US April PMI data, which weighs on the Greenback.
GBP/USD rises to near 1.2450 despite the bearish sentiment
GBP/USD has been on the rise for the second consecutive day, trading around 1.2450 in Asian trading on Wednesday. However, the pair is still below the pullback resistance at 1.2518, which coincides with the lower boundary of the descending triangle at 1.2510.
Gold price struggles to lure buyers amid positive risk tone, reduced Fed rate cut bets
Gold price lacks follow-through buying and is influenced by a combination of diverging forces. Easing geopolitical tensions continue to undermine demand for the safe-haven precious metal. Tuesday’s dismal US PMIs weigh on the USD and lend support ahead of the key US data.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.