The USD/TRY price wavered on Friday as traders reflected on the latest Turkish inflation data and US non-farm payroll numbers. The price is trading at 8.3050, which is slightly below a key support level.
Turkish inflation and US NFP data
The Central Bank of the Republic of Turkey (CBRT) has a difficult time ahead. According to the statistics office, the country’s consumer price index (CPI) rose from 18.95% in July to 19.25% in August. This was a stronger number than the median estimate of 18.70%. It was also the highest it has been since April 2019.
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The CPI declined from 1.80% to 1.12% on a MoM basis. The statistics office cited the sharp increase of food products as the key driver of consumer prices.
These inflation numbers make it difficult for the CBRT to lower interest rates in the coming meeting as President Recep Erdogan has pushed. Central banks tend to hike interest rates in a period of high inflation rate. Still, analysts at ING expect the bank to hike rates later this year. They said:
“The current level of real rates and the path forward will likely remain as the key focus for the markets. We still expect the CBT to deliver 100bp in cuts, with 50bp moves in the last two months of the year.:
The USD/TRY pair also reacted to the latest American jobs numbers. The data showed that the economy continued adding thousands of jobs. The non-farm payroll rose by 235k in August after rising by more than 943k in the previous month. The monthly increase was worse than ADP’s estimate of more than 373k.
The US unemployment rate fell from 5.4% in June to 5.2% while wages rose by 4.3%. Recent numbers have been relatively strong. For example, the number of Americans filing for initial jobless claims declined to a post-pandemic low of 340k.
Similarly, the number of vacancies has surged to more than 10 million. Walmart and other firms have started hiking wages also.
USD/TRY technical analysis
The USD/TRY price wavered on Friday. It is trading at 8.2850, which is about 6.34% below the highest level this year. The pair managed to move below the 23.6% Fibonacci retracement level on the daily chart. It also dropped below the 25-day and 50-day moving averages.
Notably, it declined below the key support level at 8.300. Therefore, the pair will likely maintain the bearish trend in the near term. If this happens, the next key level to watch is the 50% retracement at 7.8565.
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