USD / TRY weaker, falls to lows near 8.4300

• USD / TRY loses ground and tests the 8.4300 region.
• Turkey’s retail sales grew 0.7% yoy, up 12.3% yoy in July.
• The markets’ attention gradually shifts to the CBRT meeting.

The Turkish lira is appreciated even more and drags al USD/TRY to new daily lows in the 8.4300 region on Monday.

USD / TRY weakened by turkey data

USD / TRY leaves Friday’s advance behind and refocuses on the decline despite continued bullish momentum in the US dollar.

In fact, the pair now looks consolidative at the upper end of the range, with gains so far limited around the 8.5000 zone, where the 55-day SMA also coincides.

The recent uptrend in the pair follows growing concerns among investors of a possible reduction in the one-week repo rate by the Turkish central bank (CBRT) in the near-term future, particularly after the central bank it will shift its focus to underlying inflation figures as the benchmark for setting the monetary policy rate (away from usual headline inflation, which is higher). It is worth remembering that the CBRT reiterated in its last event that the key monetary policy rate will be set above the current inflation rate.

The lira found additional support following the auspicious results of the national e after industrial production expanded 8.7% in a year to July, showing some loss of momentum from the previous reading. Additionally, retail sales grew 0.7% month-on-month and 12.3% from a year earlier. Other data saw the current account deficit narrow to $ 0.68 billion in July (from $ 1.13 billion).

Key levels

So far, the pair is losing 0.28% to 8.4338 and a drop below 8.2590 (September 6 low) would target 8.1316 (April 29 low) and finally 8.0347 (200-day SMA). On the other hand, the next barrier of rises is located at 8.5063 (SMA of 55 days), followed by 8.5172 (monthly maximum of September 9) and then 8.5578 (maximum of August 20).