USD/TRY refreshes record top near $9.8500 on Turkish President Erdogan’s latest moves

• USD/TRY takes the bids to renew all-time high during the four-day uptrend.
• Turkish President Erdogan seeks expulsions of ambassadors from US and other nine countries.
• CBRT announced 200 bps rate hike on Friday, Fed Chair Power backs tapering.
• Second-tier US data, headlines from Turkey will be the key directives.

USD/TRY offers a gap-up start to the week’s trading, before refreshing the record high with $9.8505, during Monday’s Asian session. The pair takes clues from the weekend headlines, also ignoring the Central Bank of the Republic of Turkey (CBRT) moves, to please the bulls.

Reuters came out with the news quoting Turkish Recep Tayyip Erdogan as ordered the expulsion of the ambassadors of the United States and nine other Western countries.

“By Sunday evening, there was no sign that the foreign ministry had yet carried out the president's instruction, which would open the deepest rift with the West in Erdogan's 19 years in power,” the news adds.

It’s worth noting that the USD/TRY prices rallied the last week even after the CBRT surprised markets with 200 basis points (bps) of a rate cut versus to 16% benchmark interest rate versus the expectations of a 50 bps cut. The market’s reaction to the rate cuts could largely be linked to Turkish President Erdogan’s ousting of the central bank governors and staff, including those who opposed rate cuts.

On the other hand, the US Federal Reserve (Fed) Chair Jerome Powell backed tapering and stayed away from terming inflation pressure as ‘transitory’ during his latest speech on Friday.

Elsewhere, positive news from China’s Evergrande battles fresh fears of the coronavirus from Beijing and Russia, as well as the Fed tapering concerns, to challenge the sentiment.

Amid these plays, Wall Street benchmarks refreshed record, before easing a bit, whereas the US 10-year Treasury yields also stepped back from a five-month high. Following that, the S&P 500 Futures print 0.12% intraday losses by the press time.

Looking forward, the US Chicago Fed National Activity Index for September and Dallas Fed Manufacturing Business Index for October may entertain USD/TRY traders but major attention will be given to the risk catalysts, mainly from Turkey.

Technical analysis

USD/TRY bulls are likely heading towards the $10.0000 psychological magnet unless declining back below the resistance-turned-support from November 2020, near $8.9470.