- USD/TRY meets support near 5.5800, the 200-day SMA.
- FinMin B.Albayrak trusts the economy will pick up in H2.
- US labour market report coming up next on the docket.
The Turkish Lira is reversing part of the recent appreciation and is now lifting USD/TRY to levels beyond the 5.6100 area.
USD/TRY meets support near the 200-day SMA
Following two daily advances, spot is now shedding some ground on the back of quite a moderate rebound in the demand for the greenback amidst rising US yields.
Earlier in the day, Turkey FinMin B.Albayrak said he expects the domestic economy to accelerate the recovery in the second half of the year, adding that fundamentals have improved lately.
In this regard it is worth recalling that Turkey manufacturing PMI improved in June while inflation figures rose less than expected during the same period, confirming the current disinflation process.
What to look for around TRY
Recently, the CBRT left no doubts it will continue to support the current tight monetary conditions. However, the enduring disinflation process looks unabated, as reflected in the performance of consumer prices during June and this could open the door to a potential shift from the central bank to a looser monetary stance, including the palpable chance of rate cuts despite this move on rates appears somewhat untimely in the near term. On the positive view, TRY could gain some support along with the rest of the EM FX space in response to the recent shift of the Federal Reserve to a more dovish view on it monetary conditions as well as the better tone in the US-China trade dispute following last week’s truce. Still, the country needs to implement the much-needed structural reforms (announced in April) to bring in more stability and start a serious recovery in both economic activity and credibility.
USD/TRY key levels
At the moment the pair is gaining 0.42% at 5.6124 and a surpass of 5.7025 (50% Fibo retracement of the 2019 rally) would expose 5.7636 (21-day SMA) and finally 5.8949 (55-day SMA). On the other hand, the next down barrier lines up at 5.5853 (monthly low Jul.5) seconded by 5.5824 (200-day SMA) and then 5.3918 (78.6% Fibo retracement of the 2019 rally).
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