November 24, 2022
  • November 24, 2022

USD/TRY in new yearly highs just below 18.00

By on August 2, 2022 0
  • USD/TRY resumes its bullish course and approaches 18.00.
  • Renewed buyer interest in the dollar lifts the pair.
  • Investors’ attention turns to the July CPI release on Wednesday.

The Turkish lira resumes its depreciation and rises USD/TRY to new 2022 highs closer to the 6:00 p.m. hurdle on Tuesday.

USD/TRY is now watching CPI results

After two consecutive daily declines, USD/TRY is regaining upward traction and trading closer to the key 6:00 PM hurdle, or new year-to-date highs, on Tuesday.

The re-emergence of risk aversion on the jitters between the US and China supports the greenback’s better tone and the safe-haven universe, putting the EM FX space under additional pressure as a result.

Additionally, investors are expected to remain cautious in the coming hours ahead of Turkey’s July inflation data on Wednesday, with consensus expecting the CPI to rise above the 80.0% mark in July. course of the last twelve months.

What to look for around TRY

USD/TRY bullish bias remains unchanged and remains on course to revisit the key area of ​​18.00.

In the meantime, the price action of the lira should continue to revolve around the performance of energy prices, which appear to be directly correlated to developments in the war in Ukraine, general trends in risk appetite and the path of Fed rates over the next few months.

The additional risks facing the Turkish currency also come from the domestic backyard, as inflation shows no sign of abating, real interest rates remain anchored in negative numbers and political pressure to maintain the CBRT geared towards low interest rates remains omnipresent. Moreover, there does not seem to be a plan B to attract foreign currencies in a context where the country’s foreign exchange reserves are dwindling day by day.

Main events in Turkey this week: Inflation rate, producer prices (Wednesday).

Significant problems on the rear boiler: Foreign exchange intervention by the CBRT. Progress (or lack thereof) of the new government program to support the lira via protected term deposits. Constant pressure from the government on the CBRT in relation to the credibility/independence of the bank. Geopolitical crises. Structural reforms. Presidential/parliamentary elections of 23 June.

USD/TRY key levels

So far the pair is up 0.50% to 17.9491 and faces the immediate target at 17.9545 (2nd Aug 2022 high) backed by 18.2582 (all time high from 20th Dec) then 19.00 (round level). On the other hand, a break of 17.1903 (July 15th weekly low) would open the way to 17.0110 (55-day MMS) and finally to 16.0365 (June 27th monthly low).