- USD/TRY moves lower and tests 5.80, session lows.
- US-China trade concerns keep weighing on EM space.
- Turkey Economic Sentiment climbed to 1-year high in August.
The Turkish Lira keeps recovering ground lower following Monday’s ‘flash crash’ and is now dragging USD/TRY to the 5.80 neighbourhood.
USD/TRY focused on trade headlines, data
Spot is flirting with the 100-day SMA around 5.79 amidst a moderate recovery in TRY from lows beyond the psychological 6.00 mark recorded on Monday in response to a ‘flash crash’ early in the Asian trading hours.
The pair is prolonging the corrective downside despite the better tone in the Greenback. In addition, lack of headlines from the US-China trade war also appears to be sustaining the appetite for EM currencies
On the geopolitical scenario, Ankara and Moscow are likely to start negotiations regarding the purchase of Russian-made fighter jets anytime soon as well as discussions including deliveries and cooperation in electronic warfare.
The Lira is also supported by positive data in the domestic docket. Today, Economic Confidence surprised to the upside for the current month, advancing to 87.1 from 80.70. This upbeat result adds to Monday’s improvement in Capacity Utilization (76.6%) and Manufacturing Confidence (102.5).
What to look for around TRY
The current preference for safer assets in response to the US-China trade war and fears of a technical recession at some point in the next couple of years in the US has undermined extra gains in the Lira. On another front, newly appointed Governor M.Uysal appears to have inaugurated an Erdogan-sponsored easing cycle following the interest rate cut by the CBRT earlier this month. Further moves from the CBRT included the reduction of the RRR in order to boost banks’ lending and give extra oxygen to the economy. In the longer run, however, TRY looks supported by the ‘hunt for yield’, as domestic rates still look attractive in spite of the recent cut. On the more macro view, the country needs to implement the much-needed structural reforms (announced in April) to bring in more stability to the currency and sustain a serious recovery in both economic activity and credibility.
USD/TRY key levels
At the moment the pair is losing 0.39% at 5.7999 and faces the next support at 5.6816 (55-day SMA) followed by 5.5771 (200-day SMA) and then 5.4494 (monthly low Aug.8). On the upside, a surpass of 5.9416 (61.8% Fibo of the May-August drop) would expose 6.0027 (‘flash crash’ Aug.26) and finally 6.1516 (high May 23).
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
AUD/USD faces potential extra gains near term
Further weakness in the US Dollar allowed AUD/USD to rapidly forget Friday’s pullback and resume the uptrend well north of 0.6700 the figure amidst quite an auspicious start to the new trading week.
EUR/USD now retargets the 1.1150 region
EUR/USD managed to regain upside impulse and break above the 1.1100 barrier to print new multi-day peaks on the back of increasing downward pressure in the Greenback ahead of the key FOMC meeting.
Gold consolidates gains near fresh all-time highs
Gold trades in a narrow range above $2,580 after touching a new record-high near $2,590 earlier in the day. The benchmark 10-year US Treasury bond yield holds above 3.6% ahead of the Fed meeting and makes it difficult for XAU/USD to find direction.
MicroStrategy plans to buy additional Bitcoin following $700 million convertible notes sale
MicroStrategy plans to increase its Bitcoin holdings after announcing a $700 million convertible senior notes offering on Monday. The announcement follows its $1.11 billion Bitcoin purchase a few days ago.
Five Fundamentals for the week: Fed overtowers pivotal week for Gold, stocks and the US Dollar Premium
The Fed's first rate cut stands out as economic uncertainty mounts. US Retail Sales and Jobless Claims are of high interest. Rate decisions by central banks in the UK and Japan are also pivotal.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.