USD/TRY renews record top past $15.00 as Turkish President Erdogan acts again, CBRT eyed

• USD/TRY refreshes all-time high during a three-day uptrend.
• Turkey’s President Erdogan replaces two Finance Ministry officials.
• Markets react surprisingly to hawkish Fed ahead of ECB.
• CBRT is expected to announce a 100 bps rate cut.

USD/TRY picks up bids to refresh record high to $15.07, up 0.36% intraday, as the Turkish lira (TRY) traders await monetary policy decision from the Central Bank of the Republic of Turkey (CBRT) during early Thursday in Europe.

The pair’s latest run-up could be linked to the news stating that Turkish President Recep Tayyip Erdoğan replaced two of the Finance Ministry officials on Thursday. Mr. Erdogan is famous for changing the policymakers in wild moves and support of the easy money policies, to favor his argument for inflation.

On Wednesday, Reuters said, “Turkey's real interest rate is deeply negative, a red flag for investors and savers, including Turks who have flocked to hard currencies.”

It’s worth noting that the US dollar’s slow, but gradual, response to the hawkish Federal Reserve (Fed) outcome also favors the USD/TRY bulls ahead of the CBRT rate decision.

Read: Fed Quick Analysis: Hawks shift to three hikes in 2022, King dollar to end 2021 on top

“Turkey's central bank is expected to cut its policy rate by 100 basis points to 14% next week, forging on with an easing cycle that has sent the currency crashing to record lows and inflation soaring above 21%,” the latest Reuters poll mentions.

Other than the CBRT rate decision, which is likely to propel the USD/TRY in the normal case, ECB outcome and Markit PMIs for the US are extra catalysts to watch for near-term trade directions.

Technical analysis

A three-week-old rising wedge formation challenges USD/TRY bulls between $15.06 and $14.05. Given the overbought RSI conditions, a pullback is more likely should the CBRT surprise the markets.

Read: European Central Bank Preview: More recalibration or actual tightening?