USD/TRY: Turkish Pres. Erdogan propels biggest rally in 31 months

USD/TRY fades pullback from November 2020 top, keeps longest rally since August 2018.
Turkey’s President Recep Tayyip Erdogan sacked the Central Bank of the Republic of Turkey (CBRT)Governor Naci Abgal late on Friday.
Risk-off mood adds strength to the upside momentum, US session reaction, Fedspeak eyed.

Anil Panchal FXStreet

USD/TRY consolidates the heaviest jump since November 2018 while easing to 8.10 during early Monday. Even so, the pair keeps Turkish President Recep Tayyip Erdoğan-led rally while flashing over 12% intraday gains by the press time.

During late-Friday, Erdoğan fired CBRT Governor Abgal after CBRT announced a higher than expected rate hike of 200 basis points (bps), to 19% interest rate, during a routine monetary policy announcement. Mr. Erdogan has been strict in ousting policymakers and had take decisions in the past.

Following the latest decision, Reuters said, “The appointment of Sahap Kavcioglu, a former banker and ruling party lawmaker, in the early hours on Saturday marked the third time since mid-2019 that Erdogan has abruptly fired a central bank chief.”

Although Kavcioglu is considered sharing the likes of Erdogan, the job of CBRT Governor is through one and hence challenges over the USD/TRY looms despite the latest pullback.

Other than the domestic catalysts, risk-off mood, mainly taking clues from the coronavirus (COVID-19) resurgence and reflation fears, favor the US dollar strength and suggest further strength of the USD/TRY prices.

Moving on, American traders’ reaction to the move will be closely watched while many Fed policymakers are lining for speeches and could add volatility into the USD/TRY pair.

Technical analysis

Although November top surrounding 8.5815 guards USD/TRY pair’s immediate upside, a downward sloping trend line from November 24, 2020, near 7.9390, restricts the bears’ entry.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD holds above 0.7000 ahead of FOMC policy meeting

AUD/USD attracts some dip-buyers near 0.7000 during the Asian session on Tuesday, stalling the previous day's pullback from a one-month high as bets for a November RBA rate hike continue to act as a tailwind for the Aussie. Meanwhile, the US Dollar consolidates gains from the past two days ahead of the crucial two-day FOMC meeting starting later today, further supporting the currency pair.

USD/JPY consolidates above 157.50 as traders await Fed, BoJ meetings

USD/JPY trades above mid-157.00s during the Asian session on Tuesday, looking to build on its recovery from an over one-month low as speculation that the BoJ may hold off on aggressive rate hikes undermines the Japanese Yen. Meanwhile, the US Dollar sits near a one-week high, further supporting the currency pair. Bulls, however, seem hesitant ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday.

Gold trades above $4,000 and a three-month low as focus remains on FOMC

Gold attracts fresh sellers during the Asian session on Tuesday, reversing part of the previous day's modest recovery from a three-month low. US bond yields rebound slightly after the recent decline to a three-week low, helping the US Dollar preserve its gains recorded over the past two days and weighing on the non-yielding bullion. The commodity, however, holds above $4,000 as bears seem hesitant ahead of Wednesday’s FOMC rate decision.

Bitcoin faces $77,000 support test as Fed decision nears

Bitcoin (BTC) is testing key support levels after falling to $79,250 over the weekend, with persistent selling pressure and uncertainty over the Federal Reserve’s (Fed) interest rate decision likely to prolong the top crypto's decline, according to Bitfinex analysts.

Everyone's bracing for a hawkish central bank week. Here's why the surprise could be dovish

Five of the world's major central banks are preparing to announce monetary policy decisions this week, with investors increasingly anticipating higher interest rates as the global energy shock continues to push inflation above target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.