- USD/TRY picks up further downside pressure and drops to 5.80.
- The offered tone in USD keeps weighing on spot.
- Focus remains on trade jitters and the impact on EM space.
The Turkish Lira is appreciating for yet another session and has dragged USD/TRY to fresh 2-month lows in the 5.80 neighbourhood, where it is now looking to consolidate.
USD/TRY looks to trade, risk trends
The pair is attempting a sideline theme in the lower end of the recent range near the 5.80 region, all amidst a renewed offered tone surrounding the greenback and persistent trade jitters involving US, China and Mexico.
In the meantime, spot is down for the second week in a row so far on Tuesday with the exclusive driver being the weakness in the greenback in response to rising speculations over the probable rate cut by the Federal Reserve.
On another side, TRY remains vigilant on trade jitters and their impact on the EM space, while somewhat ignoring recent lower-than-expected inflation figures during last month as well as a weaker manufacturing PMI.
What to look for around TRY
The Turkish Lira is attempting to stabilize around the 5.80 region so far this week, meandering the area of multi-week lows. As usual, trade effervescence should remain as key driver in the EM FX space, while frictions between the AKP and its main opposition party in the run up to the municipal elections in Istanbul are also emerging as another source for Lira volatility albeit on the domestic front. Further out, potential US sanctions following the purchase of the Russian missile defence system keeps lingering over the country as well as sanctions over Iranian crude oil exports. Additionally, the independence and credibility of the CBRT should remain under the microscope against the omnipresent conflict between the government and the bank’s authorities. Recently, another focus of attention has emerged after the IMF urged the government to start implementing reforms aimed to bring back stability to the country’s fundamentals.
USD/TRY key levels
At the moment the pair is retreating 0.05% at 5.8268 and a breach of 5.8079 (low Jun.4) would open the door to 5.7094 (low Apr.17) and then 5.6505 (200-day SMA). On the other hand, initial hurdle lines up at 6.0228 (21-day SMA) followed by 6.1516 (high May 23) and then 6.2457 (2019 high May 9).
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