At the beginning of the week the Turkish Lira weakened against the US Dollar despite Friday’s less-than-impressive US Non Farm Payrolls report.
The US Dollar recouped losses against a number of its peers on Tuesday and demand for the Lira was undermined by Turkey’s retail sales report. Sales were shown to have fallen by -0.7% on the month in February, almost double the month-on-month decline of -0.4% predicted. The annual figure printed at 2.9%, well shy of the 4.4% expectation.
The US Dollar to Turkish Lira exchange rate advanced from a low of 2.5570 on Monday to achieve a high of 2.6049 on Tuesday. The pairing has since seen a partial reversal of these gains however as the upcoming publication of minutes from the March Federal Open Market Committee (FOMC) policy meeting weighs on the ‘Greenback’.
Over the course of the European session, the USD/TRY currency pair dipped to 2.5855 as investors bet that the minutes will contain dovish overtones and hint at US rate increases being put on hold until later in the year.
The policy statement issued in the immediate aftermath of the gathering was hardly hawkish, and it’s unlikely the central bank will have deviated too much from that path in the minutes.
The USD/TRY exchange rate held declines even as Turkish Industrial Production was shown to have rebounded by less-than-expected in February.
Industrial production in the region fell by -2.2% on the year in January and economists had projected a 1.5% increase in February. However, production only rose by 1% year-on-year.
While the FOMC meeting minutes will be the main cause of USD/TRY movement as the week continues, the Lira could also experience fluctuations in response to Friday’s domestic current account data.
Next week the only Turkish report to be aware of is the nation’s unemployment stat for January.
Economists are anticipating an increase in joblessness from 10.9% to 11.2%. If that proves to be the case, the result would weigh on the Lira.
The US reports with the most potential to impact USD/TRY trading include Advance Retail Sales, Business Inventories, Industrial/Manufacturing Production, the HAHB Housing Market Index, the publication of the Federal Reserve’s Beige Book, Housing Starts/Building Permits numbers, the US Consumer Price Index and the University of Michigan Consumer Confidence gauge.
The US CPI will be of particular interest as decelerating inflation would support the case in favour of the Federal Reserve refraining from increasing interest rates and increase demand for higher-risk and emerging-market currencies.
Before the FOMC minutes were published, the US Dollar to Turkish Lira exchange rate was trading in the region of 2.5888.