Turkish Lira drops towards 19.50 ahead of CBRT Interest Rate Decision, US GDP

  • USD/TRY picks up bids to reverse the previous day’s corrective bounce from weekly high.
  • CBRT is expected to keep rates unchanged before fueling it to 24.0% in Q3 2023.
  • US Q1 GDP Annualized may teases recession woes and prod the Turkish Lira bears.

USD/TRY prints mild gains around 19.42 as it consolidates the previous day’s losses amid early Thursday morning in Europe. In doing so, the Turkish Lira (TRY) pair portrays the typical contra moves ahead of the Central Bank of the Republic of Turkiye (CBRT) Interest Rate Decision and the US first quarter (Q1) Gross Domestic Product (GDP).

The Turkish Lira (TRY) cheered broad US Dollar weakness the previous day amid mixed sentiment. However, concerns about the CBRT’s status quo and geopolitical fears in the nation, mainly due to the earthquake and the next month’s general election.

As per the latest Reuters poll, “All 21 economists in the poll expect the central bank (CBRT) to keep its benchmark rate steady at 8.5% this week,its last monetary policy committee meeting before the vote.” The survey also quotes the median estimate while stating that Turkey’s policy rate was seen rising to 24.0% in the third quarter.

On the other hand, Turkish President Recep Tayyip Erdogan appears to have interesting election days ahead as the earthquake raised challenges for the ruling party amid public dissent in the key province.

Elsewhere, the passage of a bill that enables the US policymakers to negotiate the extension of the debt ceiling joins the mixed US data and upbeat technology companies’ earnings to underpin cautious optimism in the market. That said, the US Durable Goods Orders rose for March but couldn’t overcome the fishy details of Consumer Confidence released previously.

However, a slump in the First Republic Bank (FRB) price and the US-China tension, as well as the Western ire over Russia, prods the sentiment and puts a floor under the USD/TRY prices.

While portraying the mood, the US stock futures print mild gains and the US Dollar Index, as well as the US Treasury bond yields, grind lower.

Moving on, the CBRT announcement is less likely to entertain the USD/TRY traders unless offering any surprise, which is less anticipated considering the recent easing in inflation and the Turkish outlook. As a result, the US Q1 GDP, expected to ease to 2.0% on an annualized basis versus 2.6% prior, will be crucial to watch for clear direction.

Technical analysis

A six-week-old bullish trend channel, currently between 19.50 and 19.20, keeps USD/TRY buyers hopeful even as RSI conditions suggest that the pair buyers are running out of fuel.


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