USD/TRY flirts with multi-day peaks above 6.10

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  • USD/TRY pushes higher and surpasses the 6.10 handle.
  • US-China trade, domestic politics remain in focus.
  • Capacity Utilization, Manufacturing Confidence next on the docket.

The selling mood around the Turkish Lira is picking up further pace today and pushes USD/TRY to fresh tops in beyond the 6.10 mark.

USD/TRY keeps looking to trade, EM sentiment

The pair is threatening to break above the multi-session sideline theme, trading at shouting distance from the key 6.10 handle and posting gains for the second straight session.

In the meantime, TRY appears to have resumed the downside as of late, particularly after the Turkish central bank (CBRT) restarted the auctions of the One-Week Repo Rate at 24.0%. It is worth recalling that the CBRT suspended these auctions a couple of weeks ago in order to prevent further deterioration of the currency, forcing banks to borrow at the higher overnight rate at 25.5%.

In the domestic calendar, Capacity Utilization figures are due tomorrow seconded by the Manufacturing Confidence gauge, both for the month of May.

What to look for around TRY

Volatility around the Turkish Lira has subsided somewhat as of late, although the broader sentiment around the EM FX space should continue to influence on the currency as well as tensions on the US-China trade front. In addition, friction between the AKP and its main opposition party ahead of the municipal elections in Istanbul is also emerging as another source for Lira volatility in the next days. 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 0.86% at 6.1040 and faces the next hurdle at 6.1311 (high May 13) 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 5.6540 (200-day SMA).

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