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  • USD/TRY keeps consolidating around the 5.70 level.
  • Weekly upside remains capped by the 5.75 region.
  • US Non-farm Payrolls came in at 136K in September.

The Turkish Lira is looking to extend the recent upbeat momentum, with USD/TRY now returning to sub-5.69 levels after meeting decent resistance above 5.71.

USD/TRY remains within the broader rangebound

After two daily pullbacks in a row, the pair is now looking to extend the downside amidst the lack of clear direction in the Lira and a recovery in the buck despite US Payrolls missed estimates in September.

In fact, the US economy added 136K jobs during last month, coming in short of estimates. However, August’s print was revised higher to 168K from 130K, the jobless rate unexpectedly fell to 3.5% and wage inflation pressure subsided somewhat.

TRY also derived extra support as of late following lower-than-expected inflation figures during last month. Indeed, consumer prices rose at a monthly 0.99% and 9.26% from a year earlier, returning to single digits after more than two years. Additional data saw Producer Prices advancing 0.13% inter-month and 2.45% over the last twelve months.

What to look for around TRY

The Turkish Lira has been trading within a consolidative mood vs. the US Dollar since early September. The lower bound of the range, where sits the 200-day SMA around 5.62, remains unbroken however. TRY has digested very well the two consecutive (massive) interest rate cuts by the CBRT since President R.T.Erdogan appointed M.Uysal as Governor, although investors remain sceptical of further strength in the currency in light of a still debatable ability of the country to embark on a more sustainable growth path (Erdogan set a target of 5% GDP growth in 2020) and to implement the much needed structural reforms, which remain crucial to bring in more stability to the currency and sustainability to domestic fundamentals. On the broader view, TRY looks supported by the ‘hunt for yield’, positive headlines from the US-China trade developments and prospects of extra interest rate cuts by the Federal Reserve.

USD/TRY key levels

At the moment the pair is losing 0.03% at 5.6889 and faces the next support at 5.6367 (monthly low Sep.30) seconded by 5.6334 (200-day SMA) and then 5.5344 (low Aug.16). On the upside, a surpass of 5.7322 (100-day SMA) would aim for 5.7576 (monthly high Oct.2) and finally 5.7913 (high Sep.11).