ONLINE FOREX BROKER
In November, one US dollar was worth 8.5 Turkish liras - as many as never before. Going through turbulent ups and downs, the Turkish lira was depreciating at an accelerating pace. That month, Naci Agbal was appointed the Turkish Central Bank's governor. He immediately started steering the economy out of the crisis by increasing the rate to fight inflation. That started working: from above 8.00 in November 2020, USD/TRY dropped to 7.00 in February. There was a recent spike, though, but it was suppressed down to 7.20.
Nevertheless, the Turkish lira was destined to see its dreams of appreciation crushed. The tenure of the Turkish Central Bank's governor Naci Agbal was suddenly terminated - as was his course for the lira's restoration. As a result, USD/TRY shot up to 8.50 erasing all the gains of the lira. Global investors were spooked by this event - it completely undermines their trust in the Turkish Central Bank, the Turkish lira, and the Turkish economy, as all the three become subjects of unpredictable willpower of higher authorities. Nothing specific to Turkey, though: that's a common curse of most developing countries - especially those whose leaders prefer to shrug off the unnecessary burden of democratic social development with its corresponding economic attributes...
Commenting on the event, the Turkish Treasury and Finance Minister said the Turkish lira will keep circulating in a free-market and liberal foreign exchange environment. Objectively, there was little else to say to prevent a total flee of global investors. Fundamentally, that means that very likely, the Turkish lira will follow a very similar trajectory to what happened in August: a short-lived drop of USD/TRY following by the all-erasing rise to new all-time highs.
The area above 7.50 may well be a target for bears just to stabilize the currency pair.
Given such an unstable political and economic environment, there is little choice for USD/TRY but to rise - very probably, up to 8.00 and above.
The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
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