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  • USD/TRY advances further and tests the 6.15 area.
  • US-China trade, risk-off weighs on the Lira.
  • Turkey Capacity Utilization expanded to 76.3% in May.

The Turkish Lira remains on the defensive so far this week and is now lifting USD/TRY to fresh multi-day peaks in the 6.15 region.

USD/TRY looks to trade, data

The Turkish Lira is depreciating sharply vs. the greenback in the second half of the week, pushing spot further north of the psychological 6.00 the figure amidst persistent trade jitters and a moderate bias towards the risk-off mood.

In the meantime, there is no fresh news around the US-China trade war other than the recent lift of restrictions to operate in the US by Chinese tech giant Huawei, while Apple is facing swelling headwinds to operate in China.

In the domestic docket, Capacity Utilization rose 76.3% in May and Manufacturing Confidence ticked lower to 98.9 from 105.5 for the current month, sending mixed signals to the mood around the currency.

What to look for around TRY

The selling interest has resurfaced around the Turkish Lira, pushing the pair well above the 6.00 milestone in past sessions. As usual, trade effervescence should remain as key driver in the EM FX space, while frictions between the AKP and its main opposition party ahead of the municipal elections in Istanbul are also emerging as another source for Lira volatility 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. Adding insult to injury, the independence and credibility of the CBRT should remain under the microscope against the omnipresent conflict between the Erdogan’s administration and bank’s authorities.

USD/TRY key levels

At the moment the pair is gaining 0.72% at 6.1359 and faces the next hurdle at 6.1516 (high May 23) seconded by 6.2457 (2019 high May 9) and then 6.8353 (high Aug. 30 2018). On the other hand, a breach of 5.9472 (low May 10) would aim for 5.7094 (low Apr.17) and finally 5.6529 (200-day SMA).