What will happen? The US Q2 Gross Domestic Product will be announced at 15:30 MT time (GMT+3) on Thursday, July 29…
USD/TRY: shock waves
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...
What may happen
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.
What to do
Short-term: correction down to 7.50
The area above 7.50 may well be a target for bears just to stabilize the currency pair.
Mid-term and long-term: uptrend to 8.00
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.
Today the Fed will make a policy statement at 21:00 GMT+3. This event will affect all the currency pairs with the USD and thus almost the all Forex market!
The overall market sentiment is risk-on. The S&P 500 index (US 500) is getting close to the all-time high. Oil is recovering quickly from its recent losses.
What events to follow and how to trade during the week of July 2-6?
EUR/USD retraced to 1.1870 after breaking out this level. It should be just a natural sell-off ahead of the further rally up.
The Fed held a much-awaited meeting yesterday. The bank hasn’t made any policy changes. As a result, the USD weakened and EUR/USD rocketed. Jump in to know all the latest news!