USD/TRY struggles to justify heavy Turkish trade deficit around 18.20

• USD/TRY seeks fresh clues while taking rounds to the yearly top.
• Turkiye reported 147% YoY jump in foreign trade deficit during July.
• Optimism surrounding Ukraine’s grain exports and likely easing of supply crunch challenge pair buyers.
• The sluggish session, cautious mood ahead of Friday’s US NFP also stops USD/TRY bulls.

USD/TRY bulls take a breather, after refreshing the yearly top to 18.20, as the US dollar struggles for clear directions during the early Tuesday morning in Europe. Even so, downbeat catalysts surrounding Turkiye join hawkish Fed bets to keep the pair buyers hopeful.

Among them is the heavy trade deficit from Ankara. “Turkey's foreign trade deficit surged 147% year-on-year to $10.69 billion in July, with imports surging 41.4%, data from the Turkish Statistical Institute showed on Monday,” per Reuters. With this, the nation not only failed to achieve its previous target of returning to the trade surplus but also marks a nearly double trade deficit.

While defending the move, the policymakers appear optimistic by spotting the Ukrainian release of grain exports. “Ukraine's agricultural exports could rise to 6 million-6.5 million tonnes in October, double the volume seen in July, as its seaports gradually reopen, the country's agriculture minister said on Monday,” mentioned Reuters.

On a broader front, fears of economic slowdown, amid the aggressive rate hikes from the global central banks, also exert downside pressure on the steel price. That said, the CME’s FedWatch Tool signals a 72.5% chance of the Fed’s 75 basis points (bps) rate hike in September.

It should be noted that Turkiye’s resistance to the rate hike, despite nearly 80% inflation, joins the downbeat commodities to exert additional downside pressure on the USD/TRY prices.

Moving on, a light calendar at home emphasizes the US Consumer Confidence for August and comments from Fed speakers as the main catalysts to watch for fresh impulse. However, major attention will be given to Friday’s US jobs report as Fed Chair Powell raised concerns over economic slowdown and job market stress in his Jackson Hole speech.

Technical analysis

A slower grind to the north is likely to continue as USD/TRY remains beyond the five-week-old immediate support line near 18.10.