USD/TRY adds to recent gains and approaches 18.60… again

• USD/TRY extends the weekly upside to the vicinity of 18.60.
• The upbeat tone in the greenback lends extra legs to the pair.
• US ADP report came on the strong side in September.

The resumption of the buying interest around the greenback pushes USD/TRY to the 18.58 region on Wednesday, just a tad below Tuesday’s all-time peaks.

USD/TRY keeps targeting 19.00

USD/TRY trades with gains for the second session in a row and remains close to the 18.60 region on the back of the recovery in the dollar following a negative start of the new trading week.

On the domestic front, the depreciation around the lira appears unabated, particularly after inflation figures released on Monday showed the CPI rose at a new 24-year high past 83% in the year to September.

In the US calendar, the ADP report showed the US private sector added 208K jobs in September, surpassing expectations and adding to August’s 132K gain. Later in the session, all the attention is expected to be on the publication of the ISM Non-Manufacturing.

What to look for around TRY

USD/TRY keeps navigating the area of all-time tops near 18.60 amidst the combination of omnipresent lira weakness and the renewed bid bias in the dollar.

So far, price action around the Turkish lira is expected to keep gyrating around the performance of energy and commodity prices - which are directly correlated to developments from the war in Ukraine - the broad risk appetite trends and the Fed’s rate path in the next months.

Extra risks facing the Turkish currency also come from the domestic backyard, as inflation gives no signs of abating (despite rising less than forecast in July and August), real interest rates remain entrenched well in negative territory and the political pressure to keep the CBRT biased towards low interest rates remains omnipresent.

In addition, the lira is poised to keep suffering against the backdrop of Ankara’s plans to prioritize growth (via higher exports and tourism revenue) and the improvement in the current account.

Key events in Türkiye this week: CPI, Producer Prices, Manufacturing PMI (Monday).

Eminent issues on the back boiler: FX intervention by the CBRT. Progress of the government’s scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Structural reforms. Presidential/Parliamentary elections in June 23.

USD/TRY key levels

So far, the pair is gaining 0.10% at 18.5772 and faces the next hurdle at 18.5908 (all-time high October 4) followed by 19.00 (round level). On the downside, a break below 18.1142 (55-day SMA) would expose 17.8590 (weekly low August 17) and finally 17.7586 (monthly low).