- USD/TRY remains within a consolidation theme below 18.60.
- Turkey’s Industrial Production surprised to the downside in August.
- Turkey’s retail sales rose almost 4% mom in August.
The USD/TRY maintains the consolidating mood for one more session on Wednesday, always at levels close to 18.60.
USD/TRY remains offered ahead of the CBTR event
USD/TRY remains capped around the 18.60 area amid dollar lack of direction as well as alternating risk appetite trends on Wednesday.
Nonetheless, the lira maintains the downward trend, from time to time limited by intervention and closely following the next steps of the Turkish central banks (CBTR), as well as the government’s plans to fight inflation (if necessary). that there is).
The CBTR will meet next week and is expected to cut the Idle Rate again to one week, according to President Erdogan’s latest comments.
In the national calendar, Industrial Production grew by 1.0% annualized in August, advancing bytwenty sixth consecutive month, albeit at a slower pace. Other data indicates that Retail Sales grew by 3.7% month-on-month also in August and by 9.0% compared to the previous year.
What to keep in mind around TRY
USD/TRY continues to cruise around all-time highs near 18.60 amid the combination of pervasive lira weakness and bouts of dollar strength.
So far, price action around the Turkish lira is expected to continue to revolve around developments in energy and commodity prices – which are directly correlated to the events of the war in Ukraine – broad trends in risk appetite and the path of Fed rates in the coming months.
Additional risks facing the Turkish currency are also coming from within, as inflation shows no signs of abating (despite rising less than expected in the last three months), real interest rates remain well entrenched in negative territory and the pervasive political pressure for the CBTR to move towards a low interest rate policy.
Furthermore, the lira will continue to suffer against the background of Ankara’s plans to prioritize growth (through higher exports and tourism revenues) and improving the current account.
Technical levels
So far the pair is gaining 0.12% at 18.5867 and faces the next hurdle at 18.5980 (Oct 11 all-time high), followed by 19.00 (round level). To the downside, a break below 18.1852 (55-day SMA) would expose 17.8590 (weekly low Aug 17) and finally 17.7586 (monthly low).
Source: Fx Street
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