USD/TRY dribbles near yearly top of 16.50 ahead of Turkish inflation, US NFP

• USD/TRY remains mildly bid at six-month high, sidelined of late.
• Broad US dollar weakness failed to recall sellers amid fears of bumper inflation from “Türkiye”.
• Sluggish markets allow US dollar to lick its wounds after the biggest daily fall in a fortnight.
• Fears of softer NFP keep pair sellers hopeful but Turkish CPI, PPI will be crucial to watch.

USD/TRY treads water around 16.48, after refreshing the yearly high with a $16.49 level during early Friday.

In doing so, the Turkish lira (TRY) pair portrays the market’s indecision ahead of the key inflation data from Türkiye (as per the new official name), as well as the US Nonfarm Payrolls (NFP) and ISM Services PMI.

The pair’s latest inaction could also be linked to the firmer Forex Reserve data, as well as fears of another worrisome inflation figure from Ankara. “The Turkish central bank's net international reserves rose some $2.63 billion to $12.19 billion in the week to May 27, data from the central bank showed on Thursday, after a five-week decline,” said Reuters.

That said, Türkiye’s Consumer Price Index (CPI) is expected to jump to 76.55% YoY in May from 69.97% whereas the Producer Price Index (PPI) may also increase from the last 121.82% YoY figure.

On the other hand, anxiety ahead of the key US jobs report, mixed headlines concerning China and sluggish US Treasury yields also challenge the USD/TRY traders.

That said, the early signals for the US employment have been downside as the ADP Employment Change eased to 128K for May, versus 300K forecasts and a downwardly revised 202K previous reading while the Weekly US Initial Jobless Claims, on the other hand, dropped to 200K compared to 210K anticipated and 211K prior. Further, Nonfarm Productivity and Unit Labor Costs both improved in Q1, to -7.3% and 12.6% respectively, compared to -7.5% and 11.6% figures for market consensus. Furthermore, US Factory Orders for April softened to 0.3%, from a revised 1.8% in March and 0.7% forecast.

Moving on, Turkish inflation and the US NFP for May, expected to ease to 325K versus 428K prior, as well as the US ISM Services PMI for May which is likely to retreat from 57.1 to 56.4, will be eyed for clear directions.

Technical analysis

A sustained break of the previous resistance line from early January, around 16.39 by the press time, directs USD/TRY prices towards the $17.00 threshold before eyeing the late 2021 peak surrounding $18.36.