- USD/TRY clinches fresh multi-day peaks near 5.8700.
- Spot met support at the 200-day SMA near 5.65 on Wednesday.
- US Non-farm Payrolls next of relevance in the calendar.
The Turkish Lira is depreciating further vs. the buck at the end of the week, pushing USD/TRY to the area of new 4-day tops around the 5.8700 mark.
USD/TRY now looks to US calendar
The pair is reversing the weekly decline after meeting quite decent contention in the 5.65 neighbourhood, where sits the critical 200-day SMA. It is worth recalling that the Lira has been appreciating since late May lows above the 6.15 handle vs. the buck amidst renewed demand for EM assets.
In fact, the sentiment towards riskier assets has been improving as of late on the back of USD-selling in response to rising speculations of rate cuts by the Fed in the next months.
in addition, recent lower-than-expected inflation figures could have lent some support to household spending and demand for TRY, although prospects for the start of an easing cycle by the CBRT look premature to say the least.
Later in the day, US Non-farm Payrolls will dominate the sentiment in the global markets, with consensus seeing the economy adding more than 180K jobs during last month. In addition, the focus of attention should be on the performance of wage inflation pressures.
What to look for around TRY
The Turkish Lira is losing some momentum after clinging tops in the 5.65 area vs. the greenback earlier in the week, coincident with the 200-day SMA. 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 gaining 1.08% at 5.8409 and faces the next up barrier at 5.8762 (10-day SMA) followed by 5.9646 (21-day SMA) and then 6.1516 (high May 23). On the flip side, a breach of 5.6560 (low Jun.5) would open the door to 5.6428 (200-day SMA) and then 5.6177 (100-day SMA).
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