Higher Turkish inflation ahead of central bank meeting
With higher inflation today, traders will be watching to see if Kavcioglu falls under pressure from Erdogan to cut rates!
Share this:
Turkey’s inflation rate was released earlier and like so many other country’s inflation rates, it was higher than expected. The headline print was 18.95% vs 17.53% in June. Expectations were for 18.5%. The headline print was the highest since April 2019, and just a touch lower than the Central Bank of Turkey’s current key one-week repo rate of 19%. Again, like so many other countries around the globe, if the committee expects the inflation to be transitory, they will leave rates as is. But would they lower it?
Last week, Turkey’s central bank raised its end of year inflation target to 14.1% from 12.2% and said that inflation could be volatile over the summer months but should fall back near the target in the Fall. The central bank meets again next week, and expectations are for rates to be left unchanged. However, President Edrogan has been pushing for Governor Kavcioglu to cut interest rates! Will Kavcioglu cave to pressure from the President to cut rates? Or will he be able to handle the pressure and wait until inflation falls? (Remember: Erdogan fired former governor Agbal in March for raising rates to slow inflation).
USD/TRY has been in a long-term ascending wedge since August 2018. The pair pulled back from all-time highs (at the time) at 7.1244 and formed a rising triangle. USD/TRY broke out aggressively higher in August 2020 and continued moving higher. The pair put in new all-time high as price neared the apex of the wedge near 8.850 early June.
Source: Tradingview, Stone X
Prices have pulled back to horizontal support at the lows of June near 8.2900. The 38.2% Fibonacci retracement level from the February lows to the June high is the next support level, near 8.1136. Horizontal support crosses below there at 8.0503. Resistance is back at today’s highs of 8.4447, the July 16th lows at 8.4942, then the all-time highs at 8.8553.
Source: Tradingview, Stone X
Ahead of the Central Bank of Turkey meeting next week, Turkey will release Industrial Production and Retail Sales. This will give committee members a bit more information before they decide what to do with interest rates. With higher inflation today, traders will be watching to see if Kavcioglu falls under pressure from Erdogan to cut rates!
Learn more about forex trading opportunities.
Turkey’s inflation rate was released earlier and like so many other country’s inflation rates, it was higher than expected. The headline print was 18.95% vs 17.53% in June. Expectations were for 18.5%. The headline print was the highest since April 2019, and just a touch lower than the Central Bank of Turkey’s current key one-week repo rate of 19%. Again, like so many other countries around the globe, if the committee expects the inflation to be transitory, they will leave rates as is. But would they lower it?
Last week, Turkey’s central bank raised its end of year inflation target to 14.1% from 12.2% and said that inflation could be volatile over the summer months but should fall back near the target in the Fall. The central bank meets again next week, and expectations are for rates to be left unchanged. However, President Edrogan has been pushing for Governor Kavcioglu to cut interest rates! Will Kavcioglu cave to pressure from the President to cut rates? Or will he be able to handle the pressure and wait until inflation falls? (Remember: Erdogan fired former governor Agbal in March for raising rates to slow inflation).
USD/TRY has been in a long-term ascending wedge since August 2018. The pair pulled back from all-time highs (at the time) at 7.1244 and formed a rising triangle. USD/TRY broke out aggressively higher in August 2020 and continued moving higher. The pair put in new all-time high as price neared the apex of the wedge near 8.850 early June.
Source: Tradingview, Stone X
Prices have pulled back to horizontal support at the lows of June near 8.2900. The 38.2% Fibonacci retracement level from the February lows to the June high is the next support level, near 8.1136. Horizontal support crosses below there at 8.0503. Resistance is back at today’s highs of 8.4447, the July 16th lows at 8.4942, then the all-time highs at 8.8553.
Source: Tradingview, Stone X
Ahead of the Central Bank of Turkey meeting next week, Turkey will release Industrial Production and Retail Sales. This will give committee members a bit more information before they decide what to do with interest rates. With higher inflation today, traders will be watching to see if Kavcioglu falls under pressure from Erdogan to cut rates!
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/CAD shooting star puts September surge on notice
USD/CAD has printed a clear bearish reversal pattern after an extraordinary September surge, but confirmation may depend heavily on how US Treasury yields react to Friday’s payrolls report.
USD/MXN Analysis: Is Super Peso Starting to Fade?
Over recent trading sessions, the Mexican peso has continued to show signs of weakness against the U.S. dollar. This can already be seen in USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting sustained buying pressure in favor of the dollar in the short term.
Canadian Dollar Analysis: USD/CAD Returns to July Highs Ahead of NFP
The Canadian dollar continues to face one of its most challenging environments in recent months when it comes to maintaining strength against the U.S. dollar. The weakness of the Canadian currency is clearly reflected in USD/CAD, which has now recorded nine consecutive bullish sessions and gained more than 1.7% during that period.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.