USD/TRY: Turkish Lira hovers around record low on mixed CBRT, Fed chatters

• USD/TRY trades in choppy weekly range after refreshing all-time high.
• Markets expect CBRT rate hike next week as newly appointed policymakers seem having permission from Turkish President Erdogan.
• Fed’s hawkish pause gains little acceptance amid mixed US data, Chairman Powell’s Testimony eyed.
• Mid-tier US data, risk catalysts can entertain Turkish Lira traders amid a likely dull Friday.

USD/TRY portrays indecision among the traders after refreshing the highest price ever recorded earlier in the week, making rounds to 23.65-70 heading into Friday’s European session.

Not only on the daily chart but the weekly performance of the Turkish Lira (TRY) also appears dicey as markets await the next week’s Central Bank of the Republic of Türkiye (CBRT) monetary policy meeting, as well as the Testimony of Fed Chair Jerome Powell, especially after the latest failure to convince hawks.

That said, the market’s anxiety about the CBRT move escalates after the recent appointment of Hafize Gaye Erkan as the new Governor of the CBRT and former economy chief M. Simsek’s posting as the new Finance Minister. On the same line is a Financial Times (FT) news piece suggesting that the Turkish policymakers have a free go from President Recep Tayyip Erdogan. “Erdoğan said this week that while he had not changed his mind on the unorthodox view that high interest rates caused rather than cured inflation, he would allow Erkan and Şimşek to take steps to bring inflation to single digits from the current level close 40%,” per the FT.

On the other hand, markets struggle to believe the Federal Reserve’s (Fed) hawkish signals for the July rate hike amid recently mixed US data. That said, US Retail Sales growth marked an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, mean Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior. Meanwhile, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts. On the same line, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

Amid these plays, US Dollar Index (DXY) grinds near 102.20-30 while struggling to pare the biggest daily loss in three months whereas the US 10-year Treasury bond yields snap a two-day losing streak to regain 3.75% mark of late. Furthermore, S&P500 Futures remain dicey at a 14-month high whereas the stocks in the Asia-Pacific zone trace Wall Street benchmarks toward the north, despite the downbeat performance of Taiwan and Indonesia.

Technical analysis

Tuesday’s Doji candlestick joins the overbought RSI (14) line to challenge USD/TRY bulls unless the quote crosses the latest peak of around 24.10. The pullback moves, however, need to break the weekly support line of around 23.60-58 to convince sellers.