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  • USD/TR moves lower to the 5.65 region, new two-month lows.
  • Auspicious domestic data as of late support TRY.
  • USD-selling also helps the downside in spot.

The Turkish Lira continues to appreciate so far this week and is now dragging USD/TRY to new multi-day lows in the 5.65 region.

USD/TRY weaker on positive data, offered USD

The Lira has intensified its upside momentum this week in response to positive results from domestic fundamentals while the renewed softer tone in the buck is also collaborating with the pair’s downside.

In fact, a higher manufacturing PMI, the expansion in Retail Sales, the continuation of the downtrend in consumer prices and the recent auspicious prints from the GPD for the April-June period follow the recent improvement in the Economic Sentiment, all rendering in extra support to TRY.

In addition, Turkish exports expanded nearly 1.7% during August vs. the same month of 2018. So far this year, exports have expanded 2.9% to $117.2 billion. The government, under the New Economic Program (NEP), expects to hit $182 billion by year-end, a new all-time high.

What to look for around TRY

The Lira has been appreciating in recent sessions following auspicious results from domestic indicators and the confirmation of the downtrend in inflation. Despite the CPI still runs above forecasts, it remains well on track to reach the bank’s year-end target. In addition, hopes of a resumption of the trade talks between the US and China coupled with some extra speculation of Fed easing is also supporting the sentiment towards the EM FX space. Looking at the broader picture, TRY still looks supported by the ‘hunt for yield’, as domestic rates still look attractive in spite of the recent cut by the CBRT. On the more macro view, the country still 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 0.96% at 5.6713 and faces the next support at 5.6491 (low Sep.4) followed by 5.6374 (23.6% Fibo of the May-August drop) and then 5.5890 (200-day SMA). On the upside, a surpass of 5.8581 (high Aug.27) would expose 5.9416 (61.8% Fibo of the May-August drop) and finally 6.0027 (‘flash crash’ Aug.26).