- USD/TRY snaps three-day uptrend bit prints sluggish moves.
- CBRT revises securities maintenance ratio to 5% versus 3.0% prior.
- Sluggish markets, Fears of CBRT rate cut and risk-on mood restrict immediate downside.
- Buyers need to witness US dollar’s additional strength, backed by yields to retake control.
USD/TRY prints the first intraday loss in four on the Central Bank of the Republic of Türkiye’s (CBRT) policy moves during early Tuesday morning in Europe. That said, the Turkish lira (TRY) pair drops to 18.57 by the press time.
The CBRT said on Tuesday, per Reuters, that it revised the securities maintenance ratio to 5% from 3% and that further steps as part of its "liraization strategy" will be taken in the rest of the year and 2023. “It said in the statement that by the beginning of 2023 securities will be maintained based on the targets of the Turkish lira deposits share, instead of the conversion rate,” adds the news.
It should be noted, however, that hopes of the CBRT’s rate cut during Thursday, to 11% from 12%, challenge the USD/TRY bears. The reason could be linked to the record inflation in Turkiye.
On the other hand, US Dollar Index (DXY) renews a one-week low near 111.85. In doing so, the greenback’s gauge versus the six major currencies ignores the market’s Fed wagers as the CME’s FedWatch Tool prints a nearly 95% chance of a 75 bps Fed rate hike in November. On the same line are the upbeat comments from US Treasury Secretary Janet Yellen, suggesting a strong US jobs market, as well as upbeat US inflation expectations as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data.
The market’s risk-on mood seemed to weigh on the USD/TRY prices amid receding fears of the UK’s market collapse.
Looking forward, USD/TRY traders may witness further downside but the buyers remain hopeful ahead of the CBRT Interest Rate decision.
Technical analysis
A fortnight-old ascending trend line restricts the short-term downside of the USD/TRY pair around 18.50. That said, 18.80 and 19.00 could restrict short-term moves of the pair before directing the buyers towards the 20.00 psychological magnet.
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