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  • USD/TRY extends the drop below the 6.04 handle.
  • Turkish Lira gains traction for the third session in a row.
  • GDP, CBRT FSR, Manufacturing PMI due later in the week.

Another positive session for the Turkish currency so far, with USD/TRY flirting with weekly lows in the sub-6.04 region.

USD/TRY focused on trade, data

TRY keeps gaining ground and recovering ground lost in past weeks and is now shifting its focus to reclaim the psychological support at 6.00 the figure.

In the broader scenario, the US-China trade dispute remains in centre stage when comes to determine the price direction in the global markets and the EM space in particular, while the domestic front stays dominated by politics surrounding the upcoming municipal elections in Istanbul on June 23.

Moving forward, Q1 GDP figures are due later in the week along with the Financial Stability Report by the CBRT and Markit’s manufacturing PMI.

What to look for around TRY

The Lira has regained some composure in past sessions, managing quite well to reclaim some buying interest following recent lows in the 6.15 area vs. the buck. 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. 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 losing 0.20% at 6.0513 and a breach of 6.0344 (low May 27) would open the door to 5.9472 (low May 10) and then 5.7980 (55-day SMA). On the other hand, the next barrier emerges at 6.1516 (high May 23) seconded by 6.2457 (2019 high May 9) and then 6.8353 (high Aug. 30 2018).